Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer all blanks All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest

please answer all blanks
image text in transcribed
image text in transcribed
image text in transcribed
All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit of investment period. Each line on the following graph corresponds to an interest rate: 0%, 8%, or 16%. Identify the interest rate that corresponds with each line. Investments and loans base their interest calculations on one of two possible methods: the Interest and the interest methods. Both methods apply three variables - the amount of principal, the interest rate, and the investenent or deposit period-to the amount deposited or invested in order to compute the amount of interest. However, the two methods differ in their relationship between the variables. Nicholai is willing to imvest $30,000 for six years, and is an economically rasional investor. He has identified three investment alternatives (A, B, and C) that vary in their method of caiculating interest and in the annual interest rate offered. Since he can only make one investment during the six-year investment period, complete the follewing table and indicate whether Nicholei should invest in each of the investments. Note: When calculating each investment's future value, assume that all interest is earned annually. The final value should be rounded to the nearest whole doliar. Assume that the variables 1,N, and PV represent the interest rate, investment or deposit period, and present value of the amount depositgd or invested, respectively. Which equation best represents the calculation of a future value (FV) using: Compound interest? PV=PV(1+I)NPV=PV/(1+I)NPV=PV+(PVIN) Simple interest? PV=PVINPV=PV/(PVIN)FV=PV+(PVIN) Identfy whether the following statements about the simple and compound interest methods are true or faise. Statement The process of earning compound interest allojs a depositor or imvestor to earn interest on any interest eamed in prior periods. After the end of the second vear and all other factors remaining equal, a future value based on compound interest will never exceed the future value based on simple interest. All other factors being equal, both the simple interest and the compound interest methods will accrue the same amount of eamed interest by the end of the first year

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Ethics Management Auditing And Developing The Ethical Content Of Organizations

Authors: S.P. Kaptein

1st Edition

0792350960, 978-0792350965

More Books

Students also viewed these Accounting questions