1. In a bank account that pays interest 2% p.a, what should you deposit now to have a balance of £1,000 a year from now? £ Enter an answer correct to 2 decimal places. 2.a) You deposit £1,000 into a savings account, which pays compound interest at a rate of 5% per annum. How much money do you have after 4 years? £ Enter an answer correct to 2 decimal places. b) How many years must you wait to double your capital? years Enter an integer.

1. In a bank account that pays interest 2% p.a, what should you deposit now to have a balance of £1,000 a year from now? £ Enter an answer correct to 2 decimal places. 2.a) You deposit £1,000 into a savings account, which pays compound interest at a rate of 5% per annum. How much money do you have after 4 years? £ Enter an answer correct to 2 decimal places. b) How many years must you wait to double your capital? years Enter an integer.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

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You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
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