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11) Ms. Whodunit needs $15 000 to go on her dream vacation in four years. How much does she need to invest now in an account earning 5.5% annual interest
compounded semi-annually? [3]

12) After learning about finances in grade 11, you decide to put money and at the end
of every month invest $150 into the stock market for the next 48 years (until you
retire). Assuming the market returns 7% per annum, compounded monthly, how
much will you have after 48 years?

11 Ms Whodunit needs 15 000 to go on her dream vacation in four years How much does she need to invest now in an account earning 55 annual interest compounded s class=

Respuesta :

The amount Ms. Whodunit needs for her dream vacation is $12,073.60; while the amount you will have after 48 years is $707,387.57.

How do we calculate the present value?

11) The amount Ms. Whodunit needs for her dream vacation can be calculated using the formula for calculating the present value as follows:

PV = FV / (1 + r)^n ……………………………………………. (1)

PV = Present value or the amount she needs to invest now = ?

FV = Future value = $15,000

r = Semiannual interest rate = 5.5% / 2 = 0.0275

n = number of semi-annuals = 4 * 2 = 8

Substituting the values into equation (1), we have:

PV = $15,000 / (1 + 0.0275)^8 = $12,073.60

12) The amount you will have after 48 years can be calculated using the formula for calculating the Future Value (FV) of an Ordinary Annuity as follows:

FV = M * (((1 + r)^n - 1) / r) ................................. (2)

Where,

FV = Future value of the amount after 48 years =?

M = Monthly payment = $150

r = Monthly interest rate = 7% / 2 = 0.07 / 12 = 0.00583333333333333

n = number of months = 48 * 12 = 576

Substituting the values into equation (2), we have:

FV = $150 * (((1 + 0.00583333333333333)^576 - 1) / 0.00583333333333333)

FV = $707,387.57

Learn more about present value here: https://brainly.com/question/14860893.

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