9.Diane Barvello deposits $1,380 in a certificate of deposit for 3 years.Find the compound amount if the interest rate is 5% compounded daily.$1,587.00$1,603.31$1,597.53$1,603.3210.John Wong makes $63,800 per year maintaining a self-storage business. He was notified of a 3.3% raise in a year in which the CPI index increasedby 4.4%. Find the gain or loss in his purchasing power.loss of $701.80gain of $701.80loss of $2105.40gain of $2105.4011.Angler’s Edge, worth $12 million, is expected to grow at 5% per year compounded annually for 7 years. Find the future value to the nearest million.$16 million$18 million$17 million$19 million
Accepted Solution
A:
Question 1: A = P{1+r/365}^n
P = $1,380; r= 5% = 0.05; n = 3*365 =1095 (since it is compounded daily) Substituting;
A = 1380(1+0.05/365)^1095 = $1,603.31
Question 2: Earning in base year = $63,800 Earning in target year = 63,800*1.033 = $65,905.40
Purchasing power= Base year earning/Target year earning = {63800/65905.4}*100 = 96.81% which is equivalent to 65905.4-63800 = $2,105.40 loss in purchasing power.
Question 3: A = P{1+r}^n, where P= $12 million, r= 5% = 0.05, n = 7 years