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On January 1, 2016, you deposited $5,300 in a savings account
On January 1, 2016, you deposited $5,300 in a savings account. The account will earn 9 percent annual compound interest, which will be added to the fund balance at the end of each year. Required: 1. What will be the balance in the savings account at the end of 8 years? (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answers to 2 decimal places.) Balance in the Savings Account 2. What is the total interest for the 8 years? (Future Value of $1. Prosent Value of $1. Future Value Annuity of S1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answers to 2 decimal places.) Total Interest 3. How much interest revenue did the fund earn in 2016 and in 2017? (Round your final answers to 2 decimal places.) 2016 Interest Revenue 2017 Interest Revenue
Expert Solution
Ans.
Working
| A/1 | B | C | D | E |
| 2 | Year | Year Interest | Total Interest | Balance |
| 3 | 1 | $477.00 | $477.00 | $5,777.00 |
| 4 | 2 | $519.93 | $996.93 | $6,296.93 |
| 5 | 3 | $566.72 | $1,563.65 | $6,863.65 |
| 6 | 4 | $617.73 | $2,181.38 | $7,481.38 |
| 7 | 5 | $673.32 | $2,854.71 | $8,154.71 |
| 8 | 6 | $733.92 | $3,588.63 | $8,888.63 |
| 9 | 7 | $799.98 | $4,388.61 | $9,688.61 |
| 10 | 8 | $871.97 | $5,260.58 | $10,560.58 |
Formula
| A/1 | B | C | D | E |
| 2 | Year | Year Interest | Total Interest | Balance |
| 3 | 1 | =5300*9% | =+C3 | =5300+D3 |
| 4 | 2 | =+E3*9% | =+D3+C4 | =+E3+D4-D3 |
| 5 | 3 | =+E4*9% | =+D4+C5 | =+E4+D5-D4 |
| 6 | 4 | =+E5*9% | =+D5+C6 | =+E5+D6-D5 |
| 7 | 5 | =+E6*9% | =+D6+C7 | =+E6+D7-D6 |
| 8 | 6 | =+E7*9% | =+D7+C8 | =+E7+D8-D7 |
| 9 | 7 | =+E8*9% | =+D8+C9 | =+E8+D9-D8 |
| 10 | 8 | =+E9*9% | =+D9+C10 | =+E9+D10-D9 |
or
A = P ( 1 +r/n)nt
Where,
A = Amount
P = Principal Amount = $ 5,300
r = Rate of Interest = 9%
n = Number of times interest applied per time period = Annually i.e 1
t = Number of time period = 8 Years
A = $ 5,300 * ( 1 + 9%/1)1*8
A = $ 5,300 * ( 1.09) 8
A = $ 5,300 * 1.99256264168
A = $ 10,560.58
1. Balance in savings Bank account at the end of 8 year = $ 10,560.58
2.Total Interest for 8 Years = Ending Balance - Initial Principal Balance = $ 10,560.58 - $ 5,300 = $ 5,260.58
3. Interest Revenue in 2016 = $ 477 (Refer Table above) or $ 5,300 * 9% = $ 477
Interest Revenue in 2017 = $ 519.93 (Refer Table above) or $ 5,777 * 9% = $ 519.93
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