# 16 if arthur godfried invests 1 000 today at a rate of 7 compounding yearly what wil 4352245

16) If Arthur Godfried invests \$1,000 today at a rate of 7% compounding yearly, what will the value of the investment be in 4 years?

 Future Value of \$1 4% 5% 6% 7% 8% 9% 1 1.040 1.050 1.060 1.070 1.080 1.090 2 1.082 1.103 1.124 1.145 1.166 1.188 3 1.125 1.158 1.191 1.225 1.260 1.295 4 1.170 1.216 1.262 1.311 1.360 1.412 5 1.217 1.276 1.338 1.403 1.469 1.539 6 1.265 1.340 1.419 1.501 1.587 1.677 7 1.316 1.407 1.504 1.606 1.714 1.828 8 1.369 1.477 1.594 1.718 1.851 1.993 9 1.423 1.551 1.689 1.838 1.999 2.172 10 1.480 1.629 1.791 1.967 2.159 2.367

A) \$1,311

B) \$1,967

C) \$1,316

D) \$1,000

Explanation:  A) Calculations:  1.311 × \$1,000 = \$1,311

Diff: 2

LO:  21-3

EOC Ref:  S21-8

AACSB:  Analytic Skills

AICPA Functional:  Measurement

17) If Alice Godfried invests \$14,000 today at a rate of 4% compounding yearly, what will the value of the investment be in 8 years?

 Future Value of \$1 4% 5% 6% 7% 8% 9% 1 1.040 1.050 1.060 1.070 1.080 1.090 2 1.082 1.103 1.124 1.145 1.166 1.188 3 1.125 1.158 1.191 1.225 1.260 1.295 4 1.170 1.216 1.262 1.311 1.360 1.412 5 1.217 1.276 1.338 1.403 1.469 1.539 6 1.265 1.340 1.419 1.501 1.587 1.677 7 1.316 1.407 1.504 1.606 1.714 1.828 8 1.369 1.477 1.594 1.718 1.851 1.993 9 1.423 1.551 1.689 1.838 1.999 2.172 10 1.480 1.629 1.791 1.967 2.159 2.367

A) \$18,311

B) \$19,967

C) \$19,166

D) \$19,000

Explanation:  C) Calculations:  1.369 × \$14,000 = \$19,166

Diff: 2

LO:  21-3

EOC Ref:  S21-8

AACSB:  Analytic Skills

AICPA Functional:  Measurement

18) If Teddy Godfried invests \$10,000 today in an account compounding yearly, and he wants his money to at least double within 10 years, what interest rate is needed?

 Future Value of \$1 4% 5% 6% 7% 8% 9% 1 1.040 1.050 1.060 1.070 1.080 1.090 2 1.082 1.103 1.124 1.145 1.166 1.188 3 1.125 1.158 1.191 1.225 1.260 1.295 4 1.170 1.216 1.262 1.311 1.360 1.412 5 1.217 1.276 1.338 1.403 1.469 1.539 6 1.265 1.340 1.419 1.501 1.587 1.677 7 1.316 1.407 1.504 1.606 1.714 1.828 8 1.369 1.477 1.594 1.718 1.851 1.993 9 1.423 1.551 1.689 1.838 1.999 2.172 10 1.480 1.629 1.791 1.967 2.159 2.367

A) 5%

B) 6%

C) 7%

D) 8%

Explanation:  D) Calculations:  2.159 × \$10,000 = \$21,590

Diff: 2

LO:  21-3

EOC Ref:  S21-8

AACSB:  Analytic Skills

AICPA Functional:  Measurement

19) \$23,000 invested today in an account with 5% interest compounding yearly will grow to what amount in 6 years?

 Future Value of \$1 4% 5% 6% 7% 8% 9% 1 1.040 1.050 1.060 1.070 1.080 1.090 2 1.082 1.103 1.124 1.145 1.166 1.188 3 1.125 1.158 1.191 1.225 1.260 1.295 4 1.170 1.216 1.262 1.311 1.360 1.412 5 1.217 1.276 1.338 1.403 1.469 1.539 6 1.265 1.340 1.419 1.501 1.587 1.677 7 1.316 1.407 1.504 1.606 1.714 1.828 8 1.369 1.477 1.594 1.718 1.851 1.993 9 1.423 1.551 1.689 1.838 1.999 2.172 10 1.480 1.629 1.791 1.967 2.159 2.367

A) \$29,800

B) \$22,490

C) \$30,820

D) \$32,637

Explanation:  C) Calculations:  1.340 × \$23,000 = \$30,820

Diff: 2

LO:  21-3

EOC Ref:  S21-8

AACSB:  Analytic Skills

AICPA Functional:  Measurement

20) Billy Pierce invests \$1,000 at the end of each year for 5 years at 9%.  What is the future value of the investment?

 Future Value of an Annuity of \$1 4% 5% 6% 7% 8% 9% 1 1.000 1.000 1.000 1.000 1.000 1.000 2 2.040 2.050 2.060 2.070 2.080 2.090 3 3.122 3.153 3.184 3.215 3.246 3.278 4 4.246 4.310 4.375 4.440 4.506 4.573 5 5.416 5.526 5.637 5.751 5.867 5.985 6 6.633 6.802 6.975 7.153 7.336 7.523 7 7.898 8.142 8.394 8.654 8.923 9.200 8 9.214 9.549 9.897 10.26 10.64 11.03 9 10.58 11.03 11.49 11.98 12.49 13.02 10 12.01 12.58 13.18 13.82 14.49 15.19

A) \$5,985

B) \$1,250

C) \$4,599

D) \$7,523

Explanation:  A) Calculations:   5.985 × \$1,000 = \$5,985

Diff: 2

LO:  21-3

EOC Ref:  S21-8

AACSB:  Analytic Skills

AICPA Functional:  Measurement

21) Billy Pierce invests \$8,000 at the end of each year for 5 years at 6%.  What is the future value of the investment?

 Future Value of an Annuity of \$1 4% 5% 6% 7% 8% 9% 1 1.000 1.000 1.000 1.000 1.000 1.000 2 2.040 2.050 2.060 2.070 2.080 2.090 3 3.122 3.153 3.184 3.215 3.246 3.278 4 4.246 4.310 4.375 4.440 4.506 4.573 5 5.416 5.526 5.637 5.751 5.867 5.985 6 6.633 6.802 6.975 7.153 7.336 7.523 7 7.898 8.142 8.394 8.654 8.923 9.200 8 9.214 9.549 9.897 10.26 10.64 11.03 9 10.58 11.03 11.49 11.98 12.49 13.02 10 12.01 12.58 13.18 13.82 14.49 15.19

A) \$45,096

B) \$51,008

C) \$49,599

D) \$47,523

Explanation:  A) Calculations:   5.637 × \$8,000 = \$45,096

Diff: 2

LO:  21-3

EOC Ref:  S21-8

AACSB:  Analytic Skills

AICPA Functional:  Measurement

22) If Billy Pierce invests \$1,000 at the end of each year for 8 years, and he wants it to grow to at least \$10,000, what interest rate would be needed?

 Future Value of an Annuity of \$1 4% 5% 6% 7% 8% 9% 1 1.000 1.000 1.000 1.000 1.000 1.000 2 2.040 2.050 2.060 2.070 2.080 2.090 3 3.122 3.153 3.184 3.215 3.246 3.278 4 4.246 4.310 4.375 4.440 4.506 4.573 5 5.416 5.526 5.637 5.751 5.867 5.985 6 6.633 6.802 6.975 7.153 7.336 7.523 7 7.898 8.142 8.394 8.654 8.923 9.200 8 9.214 9.549 9.897 10.26 10.64 11.03 9 10.58 11.03 11.49 11.98 12.49 13.02 10 12.01 12.58 13.18 13.82 14.49 15.19

A) 4%

B) 5%

C) 6%

D) 7%

Explanation:  D) Calculations:   10.26 × \$1,000 = \$10,260

Diff: 2

LO:  21-3

EOC Ref:  S21-8

AACSB:  Analytic Skills

AICPA Functional:  Measurement

23) If Billy Pierce invests \$1,000 at the end of each year at 9% compounded annually, how many years will it take until his investment reaches above \$10,000?

 Future Value of an Annuity of \$1 4% 5% 6% 7% 8% 9% 1 1.000 1.000 1.000 1.000 1.000 1.000 2 2.040 2.050 2.060 2.070 2.080 2.090 3 3.122 3.153 3.184 3.215 3.246 3.278 4 4.246 4.310 4.375 4.440 4.506 4.573 5 5.416 5.526 5.637 5.751 5.867 5.985 6 6.633 6.802 6.975 7.153 7.336 7.523 7 7.898 8.142 8.394 8.654 8.923 9.200 8 9.214 9.549 9.897 10.26 10.64 11.03 9 10.58 11.03 11.49 11.98 12.49 13.02 10 12.01 12.58 13.18 13.82 14.49 15.19

A) 5 years

B) 6 years

C) 7 years

D) 8 years

Explanation:  D) Calculations:   11.03 × \$1,000 = \$11,030

Diff: 2

LO:  21-3

EOC Ref:  S21-8

AACSB:  Analytic Skills

AICPA Functional:  Measurement

24) Your grandmother has promised to give you \$2,000 at the end of each of the next four years if you earn Cs or better in all of your courses each year.  Using a discount rate of 8% and the table below, what is the  present value of the gift?

 Present Value of an Annuity of \$1 5% 6% 7% 8% 9% 10% 1 0.952 0.943 0.935 0.926 0.917 0.909 2 1.859 1.833 1.808 1.783 1.759 1.736 3 2.723 2.673 2.624 2.577 2.531 2.487 4 3.546 3.465 3.387 3.312 3.240 3.170 5 4.329 4.212 4.100 3.993 3.890 3.791

A) \$5,612

B) \$5,900

C) \$6,109

D) \$6,624

Explanation:  D) Calculations: 3.312 × \$2,000 = \$6,624

Diff: 2

LO:  21-3

EOC Ref:  S21-7

AACSB:  Analytic Skills

AICPA Functional:  Measurement

25) You are currently 25 and would like to retire at age 45. You plan to save by making equal investments of \$10,000 at the end of each year for the next 20 years. If you are able to earn 8% per year on your investments, how much will you have at the end of the 20 years?   Please refer to the table below:

Future Value of an Annuity of \$1

 Periods 8% 12 18.98 13 21.5 14 24.21 15 27.15 16 30.32 17 33.75 18 37.45 19 41.45 20 45.76

A) \$216,000

B) \$200,000

C) \$457,600

D) \$576,900

Explanation:  C) Calculations: 45.76 × \$10,000 = \$457,600

Diff: 2

LO:  21-3

EOC Ref:  S21-8

AACSB:  Analytic Skills