Asked by Amanjot singh on May 17, 2024
Verified
Carol Chin received $5,400 as an annual profit-sharing bonus from her employer. Her accountant recommended an investment that would give her a return of 9% compounded annually. Compute the value of Carol's investment after 7 years. (Use Tables 16-1A&B or a calculator.)
Compounded Annually
Interest on an investment that is calculated once per year, adding to the principal amount for future interest calculations.
Profit-Sharing
A company policy of distributing a portion of net profits among its employees as a form of incentive and reward.
Annual Profit
The financial gain or earnings of a business or individual for one full year after all expenses have been subtracted from total revenues.
- Become proficient in the concept of future value and its calculation process.
- Embrace the concept of compound interest and the formula for its computation.
- Develop the skill to employ financial tables and calculators for the calculation of future values and compound interest.
Verified Answer
$5,400 ´ 1.82804 = $9,871.42 value after 7 years
Learning Objectives
- Become proficient in the concept of future value and its calculation process.
- Embrace the concept of compound interest and the formula for its computation.
- Develop the skill to employ financial tables and calculators for the calculation of future values and compound interest.
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