Calculate Answers to the Following Using Future Value And/or Present

question 90

Essay

Calculate answers to the following using future value and/or present value tables:
a.If an accumulation of $1,000 is desired at the end of 4 years,what bank deposit must be made now to accomplish that goal,assuming 10 percent interest compounded annually?
b.A deposit of $600 made at the end of every 6 months for 5 years would grow to what amount,assuming 8 percent interest compounded semiannually.

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Definitions:

Exact Simple Interest

Interest calculated linearly on the principal amount, where the calculation is based precisely on the time period involved.

365-Day Year

A method of calculating interest that assumes all years have 365 days, used in some financial contexts.

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or deposit, based solely on the principal, rate, and time.

360-Day Year

A method used in accounting and finance that assumes a year has 360 days to simplify interest calculations.