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For each of these situations, determine the savings amount. Use the time value of money tables inChapter 1 (Exhibit 1–3) or in the Chapter 1 appendix. (LO 4.3)a. What would be the value of a savings account started with $700, earning 4 percent (compounded annually) after 10 years?b. Brenda Young desires to have $15,000 eight years from now for her daughter’s college fund. If she will earn 6 percent (compounded annually) on her money, what amount should she deposit now? Use the present value of a single amount calculation.c. What amount would you have if you deposited $1,800 a year for 30 years at 8 percent (compounded annually)?

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Answer:

a. What would be the value of a savings account started with $700, earning 4 percent (compounded annually) after 10 years?

$700 * 1.480 = $1,036.00

b. Brenda Young desires to have $15,000 eight years from now for her daughter’s college fund. If she will earn 6 percent (compounded annually) on her money, what amount should she deposit now? Use the present value of a single amount calculation.

$15,000 * 0.627 = $9,405

c. What amount would you have if you deposited $1,800 a year for 30 years at 8 percent (compounded annually)?

$1,800 * 113.28 = $203,904

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