1 2 3 Dick Hunt is saving for a new car that costs 40000 How

Dick Hunt is saving for a new car that costs $40.000. How many dollars should he set aside now to have $40,000 in 5 years assuming money compounds at 4%? Present Value Interest Factors Period 2% 4% 6% 8% 10% 12% 15% 20% \' .9804 .9615 9434 9259 .9091 .929 8696 .8333 2 9612 9246 8900 8573 8264 972 7561 6944 3 .9423 .8890 B396 ,938 .7513 ,118 6575 ,5787 4 9238 8548 7921 7350 6830 6355 5718 823 5 9057 8319 7473 6806 6209 5674 4972 019 6 8880 93 7050 6302 5645 5066 A323 3349 7 .8706 .7599 6651 S835 .s132 AS23 3759 ,279, 8535 7307 6274 5403 4665 4039 3269 2326 9 8363 7026 5919 5002 241 3606 2843 1938 10 .8203 6756 5584 A632-3855 3220 2472 .161 s 043 6496 5268 A289 05 2875 2149 1346 12 78 6246 4970 3971 316 2567 1869 1122 13 730 6006 688 3677 2897 2292 1625 0935 14 .7S79 .57754423 340S .2633 2046 .1413 .0779 15 .7430 .5553 A173 .3152 .2394 .1827 .1229 .0649 16 7284 339 3936 2919 2176 1631 1069 054 17 7142 5134 3714 2703 1978 456 0929 0451 18 7002 4936 35o3 2502 1799 1300 08 0376 19 6864 4746 3305 2317 1635 161 0703 0313 20 6730 AS64 3118 2145 ·1486 .0037 D611 0261 Select one: a. 31,276 o b. 32.276 Oc.33,276 d, 34.276

Solution

Question no:1 Answer is option (C ) $33,276 Compound interest Formula including principal A = Principal * (1+ r/n)^nt A= Future amount =$40,000 r= rate of interest per anum =4% n= number of times Interest compound per year =1 t= number of years =5 $40,000 = Principal * [(1+      0.04/1)^1*5] $40,000 =Principal * (1.04)^5 Principal = $40,000/(1.04)^5 Principal amount = $40,000*0.8319 =$33276 Question no:2 Answer is option (A ) $45594 Compound interest Formula including principal A = Principal * (1+ r/n)^nt A= Future amount =$60,000 r= rate of interest per anum =4% n= number of times Interest compound per year =1 t= number of years =7 $60,000 = Principal * [(1+      0.04/1)^1*7] $60,000 =Principal * (1.04)^7 Principal = $60,000/(1.04)^7 Principal amount = $60,000*0.7599 =$45594 Question no:3 Answer is option (B ) $41595 Compound interest Formula including principal A = Principal * (1+ r/n)^nt A= Future amount =$50,000 r= rate of interest per anum =4% n= number of times Interest compound per year =1 t= number of years =5 $50,000 = Principal * [(1+      0.04/1)^1*5] $50,000 =Principal * (1.04)^5 Principal = $50,000/(1.04)^5 Principal amount = $50,000*0.8319 =$41595