Suppose you invest $1000 in an account paying 8% interest per year. a. What is the balance

Question:

Suppose you invest $1000 in an account paying 8% interest per year.

a. What is the balance in the account after 3 years? How much of this balance corresponds to “interest on interest”?

b. What is the balance in the account after 25 years? How much of this balance corresponds to “interest on interest”?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals of Corporate Finance

ISBN: 978-0132148238

2nd edition

Authors: Berk, DeMarzo, Harford

See More Books

Question Posted: Jan 14, 2012 02:20 AM

See More Questions

What is the balance in the balanced scorecard?
Use this information to compute the following: FunTime Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States including Charleston,...
Suppose that a particular pendulum is required to have a period of exactly 3.000 s -- each one-way swing takes 1.500 s. (a) What is the length of this pendulum in Austin, Texas, where g = 9.793 m/s 2...
To the right is the graph of the position of the object versus time: Which of graphs below correctly shows the object's velocity versus time? velocity (m/s) velocity (m/s) 1.5 1 0.5 -0.5 -1 -1.5 15...
ABC Company sells 10,000 units of a product at $30 per unit. This is the first year of operations so there is no beginning inventory of finished units. The following information is available: Units...
The writer wishes to include the following sentence in the essay: When youve had your fill, you can simply stride right into the nearest Metro station, look at the map, and head straight for home....
PR 2-2 A firm sells a part of its investment interest, reducing its holding from 30% to 10%. The firm decides, correctly, that the equity method is no longer appropriate. What is the basis for the...
A Japanese company has a bond outstanding that sells for 87 percent of its 100,000 par value. The bond has a coupon rate of 4.3 percent paid annually and matures in 18 years. What is the yield to...
What is the difference between a transaction gain or loss and a translation gain or loss?
Construct an ogive for the variable Type in the financial database. The 100 companies in this database are each categorized into one of seven types of companies. These types are listed at the end of...
Consider the following alternatives: i. $100 received in one year ii. $200 received in 5 years iii. $300 received in 10 years a. Rank the alternatives from most valuable to least valuable if the...
Calculate the future value of $2000 in a. 5 years at an interest rate of 5% per year. b. 10 years at an interest rate of 5% per year. c. 5 years at an interest rate of 10% per year. d. Why is the...
The government is considering two ways to help the needy: giving them cash or giving them free meals at soup kitchens. Give an argument for giving cash. Give an argument, based on asymmetric...
Woodland Wearables produces two models of smartwatches, the Basic and the Flash. The watches have the following characteristics:Basic Flash Selling price per watch$ is 270$ 460 Variable cost per...
Based on the information provided and recognizing the value of coordinating across its portfolio of businesses, how should LendingTree manage these newer businesses? * as more integrated units * as...
Trust Fund Worksheet Background An inter vivos trust was created by Isaac Posney. Isaac owned a large department store in Juggins, Utah. Adjacent to the store, Isaac also owned a tract of land that...
A popular theory is that presidential candidates have an advantage if they are taller than their main opponents. Listed are heights (in centimeters) of randomly selected presidents along with the...
Gracia Enterprises operates across five industries. Task 1 : After reviewing the information provided, determine which of the five operating segments are reportable based on the revenue test, asset...
Refer to Example 11.2. Create a table that shows the effect on the test statistic and the p-value of changing the value of the sample mean. Use , 15.5, 16.0, 16.5, 17.0, 17.5, 18.0, 18.5, and 19.0
Solve the relation Exz:Solve therelation ne %3D
Estimate the molar heat capacity (at constant volume) of sulfur dioxide gas. In addition to translational and rotational motion, there is vibrational motion. Each vibrational degree of freedom...
Lockboxes and Collection it takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposit checks from customers. Cookie Cutters management is considering a lockbox system to reduce...
Value of Delay no more pencils, Inc., disburses checks every two weeks that average $57,000 and take seven days to clear. How much interest can the company earn annually if it delays transfer of...
NPV and Reducing Float No more books corporation has an agreement with Lollipop Bank whereby the bank handles $6 million in collections a day and requires a $450,000 compensating balance. No more...
1. (A nice inharitage) Suppose $1 were invested in 1776 at 3.3% interest compounded yearly a) Approximatelly how much would that investment be worth today: $1,000, $10,000, $100,000, or $1,000,000?...
Why Should not the government subsidize home buyers who make less than $120K per year. please explain this statement
Entries for equity investments: 20%50% ownership On January 6, 20Y8, Bulldog Co. purchased 25% of the outstanding common stock of $159,000. Gator Co. paid total dividends of $20,700 to all...

Suppose you invest $1000 in an account paying 8% interest per year. a. What is the balance

Question:

Step by Step Answer:

Plan You must first compute the FV and then subtract off the initial inves...View the full answer

Fundamentals of Corporate Finance

Students also viewed these Corporate Finance questions