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------------------------------ On January 1, 2018, you deposited $5,700 in a savings account. The account will earn 9 percent annual compound interest, which will be added
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On January 1, 2018, you deposited $5,700 in a savings account. The account will earn 9 percent annual compound interest, which will be added to the fund balance at the end of each year.
Required:
1. What will be the balance in the savings account at the end of 8 years?
2. What is the total interest for the 8 years?
3. How much interest revenue did the fund earn in 2018 and in 2019? (already answered correctly)
Your friend Harold is trying to decide whether to buy or lease his next vehicle. He has gathered information about each option but is not sure how to compare the alternatives. Purchasing a new vehicle will cost $34,500, and Harold expects to spend about $1,300 per year in maintenance costs. He would keep the vehicle for five years and estimates that the salvage value will be $13,700. Alternatively, Harold could lease the same vehicle for five years at a cost of $4,485 per year, including maintenance. Assume a discount rate of 11 percent. Required: 1. Calculate the net present value of Harold's options. (Future Value of $1, Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amounts should be indicated by a minus sign. Round your final answers to 2 decimal places. Do not round intermediate calculations.) Answer is complete but not entirely correct. NPV Purchase $ Option (31,174.40) Lease Option $ (18,399.44) 2. Advise Harold about which option he should choose. Lease Option Purchase Option Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What will be the balance in the savings account at the end of 8 years? (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answer to 2 decimal places.) Balance in the Savings Account Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the total interest for the 8 years? (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your intermediate and final answer to 2 decimal places.) Total Interest Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much interest revenue did the fund earn in 2018 and in 2019? (Round your final answers to 2 decimal places.) 2018 S Interest Revenue Interest Revenue 513.00 559.17 2019 SStep by Step Solution
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