Brooks 3e IM 03
Brooks 3e IM 03
FV = PV x (1+r)n
Example 2: If John closes out his account after 3
years, how much money will he have accumulated?
How much of that is the interest-on-interest
component? What about after 10 years?
Example 4 (Answer)
OR
PV = $24,976.10 x (1/(1+0.09)13=$24,976.10 x 0.32618 =
$8,146.67
OR
OR
You have decided that you will sell off your house,
which is currently valued at $300,000, at a point
when it appreciates in value to $450,000. If houses
are appreciating at an average annual rate of 4.5%
in your neighborhood, for approximately how long
will you be staying in the house?
OR
n =[ ln(FV/PV)]/[ln(1+i)]
n =[ ln(450,000/(300,000])/[ln(1.045)]
= .40547 / .04402 = 9.21 years
Bank A
Bank B