Calculating Compound Interest and Depreciation Using Finance Solver

in finance solver when PMT equals zero compounding periods per year equals payments per year equals

k k is the number of compounding periods per year and a capital N equals n * K there four capital N is the total number

of compounding periods in N years question three Angel has $520 in his saing account Angel

considers investing the money for five years with a bank the bank offers an annual interest rate of

1.2% compounded cly calculate the amount of money Andrew would have at the end of 5 years with a bank give your answer

correct to two decimal places first of all for this question we know PMT equals zero so z y = p y =

k we know this k = 4 n = 5 and r equal 1.2% as long as the PMT equals zero you have two choices either you use

compounding interest formula or use the finance solver it's really up to you I will show you both ways to work

this out I will show you how to use this formula to solve question a future value equals the present value times 1

+ r over 100 * K to the power of 4 K * n then we just need to plug in or do the substitution

520 is a PV so 520 * 1 + 1.2 over 100 * K is 4 4 * 5 then we go to

calculator enter two decimal places $552

111 now I will show you how to use equ solver to solve this question K curly is four so we get

four four and n equals n *

K N is a five so 5 * 4 equals 20

[Music] 1.2% present value is negative 520 PMT is

zero future value is something we are looking for go to menu eight

enter N is a 20 I is 1 2 present value is negative

520 PMT is zero future value is something we are looking for ppy is

four then move the cursor to future value enter we got exactly the same answer

$252 111 instead of investing the money Andrew decides to buy a phone that costs

$520 at the end of five years the phone will have a value of $30 it may be assumed that depreciation

rate per year is a constant find B calculate the annual depreciation rate of the phone this question still

PMT equals zero so if you want to use the finance solver make sure Cy = py = K since PMT

equal zero we can still use this formula to work this out in this situation we need to figure out

depreciation rate per year which means k equal 1 so we do the substitution $30 for future value

present value is 520 1 plus we are looking for this R over 100 *

1 1 * 5 let's let's go to calculator then we go to control menu we want to solve this by equan

solver enter enter enter we got negative answer remember depreciation rate is negative negative

435 at the 36 F by solver R equals 4 43.5 when you answer this question it

should be a positive answer so we will see the depreciation rate is

43.5% do not forget this percentage cypy both one future value is 30 PMT is zero present value is

negative 520 interest rate is something we are looking

for capital N equals NK equal 5 * 1 = 5 let's go to calculator I is something we looking for

present value negative 520 PMT is0 zero future value is a 30 py is

1 move the cursor to I percent enter you got the same answer