on Wednesday, June 10, 2009

Question #1

George wants to invest $10,000 into an account. He has two options, the first bank offers to invest it at a 7.2% rate for 7 years. His second option from another bank is to invest it at a 9% rate but for only for five years. He wants to know which investment will give him more money after the time is up. Which investment will give more and by how much?George then plans to invest his money a second time at a 12% rate for two years. What will be George's final amount of money in both scenarios? All of Goerge's investments are compounded yearly.
Option # 1

N=7
I%=7.2
PV=-10000
PMT=0
FV=16269.09883
P/Y=1
C/Y=1
PMT: END BEGIN
Option #2

N=5
I%=9
PV=-10000
PMT=0
FV=15386.23955
P/Y=1
C/Y=1
PMT: END BEGIN


The first option will give him more by $882.86 (16269.09883-15386.23955)


WHY & HOW

The numbers in "N", "I%" and "PV" come directly from the information in the question.
"P/Y and C/Y" are 1 because the money is compounded yearly and not semi annually or quarterly. Semi annually is compounded twice a year. Quarterly is compounded four times a year.

The second Investment

#1

N=2
I%=12
PV=-16269.09883
PMT=0
FV=19300.49889
P/Y=1
C/Y=1
PMT: END BEGIN
George's final amount will be $19300.50 in scenario one.

#2
N=2
I%=12
PV=-15386.23955
PMT=0
FV=20407.95757
P/Y=1
C/Y=1
PMT: END BEGIN
George's final amount will be $20407.96 in scenario two.

Question #2

When you walk home from the big bridge there is a pizza place and a chicken place. Calculate the total amount of ways home. The P(passing only the pizza place), P(passing pizza and chicken place) if you can only walk south and east only.
There are 336 ways home
The P(passing pizza place) is 5.95%(20/336)
The P(passing pizza & chicken place) is 31.25% (105/336)
Click here to see WHY? & HOW?

1 comments:

dkuropatwa said...

NNNA

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