Finanace question?

You want to receive $12,000 from the bank in 8 years from today. What should be the appropriate rate of investment if you invest $9,000 today?

Thanks for any help

Finanace question?construction loans

The formula *normally* used is:

FV = P * [1 + (r/n)]^(n*t)

or

FV = Pe^(rt)

however, your problem doesn%26#039;t state the number of compoundings per year, so we%26#039;ll assume (n = 1).

Now we have a simplified formula:

FV = P * (1 + r)^t

Where:

FV = Future Value

P = Principal (amount deposited)

r = annual interest rate

t = number of years

Solving the above formula for r, we get:

r = [(FV/P)^(1/t)] - 1, (such that FV/P %26gt;0)

r = [($12,000/$9,000)^(1/8)] - 1

r = [(1.33333)^(1/8)] - 1

r = [1.03615] - 1

r = .036615 or 3.6615%

Let%26#039;s check our work...

First Year:

$9,000.00 + ($9,000.00 * 0.036615) = $9,329.54

Second Year:

$9,329.54 + ($9,329.54 * 0.036615) = $9,671.14

Third Year:

$9,671.14 + ($9,671.14 * 0.036615) = $10025.25

Fourth Year:

$10,025.25 + ($10,025.25 * 0.036615) = $10,392.32

Fifth Year:

$10,392.32 + ($10,392.32 * 0.036615) = $10,772.83

Sixth Year:

$10,772.83 + ($10,772.83 * 0.036615) = $11,167.27

Seventh Year:

$11,167.27 + ($11,167.27 * 0.036615) = $11,572.16

Eighth Year:

$11,572.16 + ($11,572.16 * 0.036615) = $11,995.87

$11,995.87 鈮?$12,000.00 (Difference due to rounding)

Good luck in your studies,

~ Mitch ~

P.S. - If you use the formula for *Continuous* Compounding,

FV = Pe^(rt)

Solving for t:

... Many computations later...

r = 0.03596025... or 3.6%

Checking that answer:

[$9,000 * (2.71828)] ^ (.036 * 8) = $12,003.82

(Difference due to rounding errors).

Finanace question?

loan

it is not that easy, you have to speculate, and gamle to get a high yield or just settle with a low interest safe return as simple as that regards

Regards

Ryan Dior