Answer:

Given information:

• Amount deposited is $15,000.

• At 7 percent simple interest rate.• Time period is 25 year.

• At 7 percent compound interest rate.The total amount of interest earned from present worth of deposit:

The total amount of interest earned from present worth of deposit can be calculated by using the following formula: …… (1)Where,

I = Total amount of interest rate earned

P = Present value

N = Number of years

i = Simple rate of interest

Substitute the respective values in Equation (1), to obtain the total amount of interest earned from the present worth of deposit. Hence, the total amount of interest earned from the present worth of deposit is .

The total amount of interest earned from present worth of deposit:

The total amount of interest earned from the present worth of deposit can be calculated by using the following formula: …… (2)Where,

I = Total amount of interest rate earned

P = Present value

N = Number of years

i = Compound rate of interest

Substitute the respective value in Equation (2), to obtain the total amount of interest earned from the present worth of deposit. Hence, the total amount of interest earned from the present worth of deposit is .

Answer:

Given information:

• Five annual withdrawals.

• First withdrawal at the end of year 6 is $1,000.

• Interest rate compounded annually is 10 %.

• Annual cash withdrawals are expected to increase at the rate of 10 %.

In order to obtain the amount of equal annual deposit for the first 5 years, the future equivalent worth of annual cash deposit for first 5 years (0-5) is set equal to the to present equivalent worth of annual cash withdrawals for the next 5 years (6-10).

Amount of equal annual deposit for the first 5 years:

Amount of equal annual deposit for the first 5 years can be obtained by using the following formula: …… (1)Where, Future equivalent worth of annual cash deposit Present equivalent worth of annual cash withdrawals Annual cash deposit = Annual cash withdrawals

i = Interest rate

N = Number of years

Substitute the respective values in Equation (1) to obtain the amount of equal annual deposit for the first 5 years. Since the amount of equal annual deposit for the first 5 years is , option a is correct.

Answer:

Given information:

Table-1 shows the cash flow of the two projects A and b.Table-1 • Interest rate is 10 %.

Value of C:

Value of C can be calculated by using the following formula: …… (1)Where,

n = time period

I = interest rate on year = cash flow of project A for year 1 = increasing cash flow of project A from year 1

Substitute the respective values in Equation (1) to calculate the value of c. The value of C is . Hence, option d is correct.