Sunday

March 29, 2015

March 29, 2015

Posted by **molly anne** on Thursday, September 16, 2010 at 4:36pm.

How much would you have at the end of 7 years if you choose to

take the $12020 offer now, and you use the market to earn interest

on the funds?

How much would you have at the end of 7 years if you choose to

take the installments each year, and you still used the market to earn

interest on the the funds?

- calculus -
**Henry**, Friday, September 17, 2010 at 12:10pmPt = Po * e^(r*t).

Pt = value after time t.

Po = Initial investment.

e = 2.7183 = base of natural log.

r = Annual percentage rate(APR).

t = lengtth of investment in years.

First Option

Pt = 12020 * 2.7183^(0.056*7) = 17788.90.

2nd Option

Year 1. Pt = 1950 * 2.7183^(0.056*1) = 2062.32 @ end of 1st yr.

2. Pt = (2062.32 + 1850) * 2.7183^(0.056*1) = 4243.42 @ end of 2nd yr

3. Pt = (4243.42 + 1950) * 2.7183^(0.056*1) = 6550.15 @ end of 3rd yr

4. Pt = (6550.15 + 1950) * 2.7183^(0.056*1) = 8989.74 @ end of 4th yr

5. Pt = (8989.74 + 1950) * 2.7183^(0.056*1) = 11569.85 @ end of 5th yr

6. Pt = (11569.85 + 1950) * 2.7183^(0.056*1) = 14298.57 @ end of 6th yr

7. Pt = (14298.57 + 1950) * 2.7183^(0.056*1) = 17184.46 @ end of 7th yr

Option 1(17788.90) is the best choice.

NOTE: Under option 2, interest was earned on the interest.

**Answer this Question**

**Related Questions**

college math - A business associate who owes you 3600 dollars offers to pay you ...

Pre-Calculus - What is the present value of a $1000 bond which pays $50 a year ...

calculus - Choice 1: Payments of $ 2600 now, $3000 a year from now, and $3450 ...

calculus - Assume the initial investment was $6600 and the annual interest rate ...

calculating annuity - IF a company will generate 80,000 in annual revenue each ...

calculus - The proprietor of Carson Hardware Store has decided to set up a ...

calculus - Choice 1: Payments of $ 2600 now, $ 3200 a year from now, and $ 3880 ...

Algebra - Suppose that the annual interest rate on your checking account is 7.5 ...

Calculus help - assume that the initial deposit is $20000 and the nominal annual...

Math - Choice 1: Payments of $ 2600 now, $ 3200 a year from now, and $ 3880 two ...