How much more money would you earn from your Second City Bank account at the end of 8 years?

  

Check the file has all the questions and problems. All are 7 questions.
Q1
First City Bank pays 8 percent simple interest on its savings account balances,
whereas Second City Bank pays 8 percent interest compounded annually.
If you made a $65,000 deposit in each bank, how much more money
would you earn from your Second City Bank account at the end of 8 years?
(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Difference in accounts
Q2
Q3
$
Q4
Assume that in January 2013, the average house price in a
particular area was $284,400. In January 2001, the average price was $201,300.
What was the annual increase in selling price?
(Do not round intermediate calculations. Enter your answer as a percent rounded answer
to 2 decimal places, e.g., 32.16.)
Annual increase in selling price
%
Q5
Your coin collection contains 55 1952 silver dollars. If your
grandparents purchased them for their face value when they were new, how much
will your collection be worth when you retire in 2065, assuming they appreciate at an
annual rate of 4.6 percent? (Do not round intermediate calculations and round your
final answer to 2 decimal places, e.g., 32.16.)
Future value
$
Q6
Although appealing to more refined tastes, art as a collectible has not always performed so profitably.
During 2003, an auction house sold a sculpture at auction for a price of $10,381,500.
Unfortunately for the previous owner, he had purchased it in 1998 at a price of $12,517,500.
What was his annual rate of return on this sculpture?
(Negative amount should be indicated by a minus sign. Do not round intermediate calculations.
Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Annual rate of return
%
Q7
You are scheduled to receive $16,000 in two years.
When you receive it, you will invest it for eight more years at 9.25 percent per year.
How much will you have in ten years?
(Do not round intermediate calculations.
Round your answer to 2 decimal places, e.g., 32.16.)
Amount
$

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Finances play a crucial role in our lives. Knowing how to calculate interest rates, the value of investments and the growth of assets can provide us with a better insight into our financial standings. In this article, we will discuss various financial calculations and how they impact your financial decisions.

Description:

This article will cover seven different financial calculations, including calculating the difference in savings account balances between banks, the annual increase in selling price for a property, the future value of a coin collection, the annual rate of return on an art collectible, and the amount of an investment after 10 years. These calculations will help you make informed decisions, whether it be choosing between different savings accounts, analyzing the growth of an asset, or assessing the profitability of an investment. We will explain each calculation step-by-step to help you better understand your finances and make wise financial choices.

Objectives:
– To understand the concept and calculation of simple interest
– To understand the concept and calculation of compound interest
– To understand and apply the concept of annual increase in selling price
– To understand and apply the concept of future value
– To understand and apply the concept of annual rate of return
– To be able to calculate the difference in amount between two accounts with different interest calculation methods
– To be able to calculate the future value of an investment after a specific time period at a given interest rate

Learning Outcomes:
After completing this content, students should be able to:
– Compare and calculate the difference in earnings between simple interest and compound interest accounts
– Calculate the annual increase in selling price as a percentage
– Calculate the future value of an investment after a specific time period at a given rate of interest
– Calculate the annual rate of return on an investment
– Apply the concepts of future value and annual rate of return to real-life situations involving investments
– Analyze and choose the best investment option based on their interest calculation methods and rates
– Identify and avoid potential losses in art collectibles by calculating the annual rate of return.

Solution 1:

Difference in Accounts:

To calculate the difference in earnings between the two banks, we need to use the simple interest formula for First City Bank and the compound interest formula for Second City Bank.

For First City Bank:

I = Prt
I = 65000 * 0.08 * 8
I = $41,600

For Second City Bank:

A = P(1 + r/n)^(nt)
A = 65000(1 + 0.08/1)^(1*8)
A = $126,677.28

Difference = A – P = $126,677.28 – $65,000 = $61,677.28

Therefore, you would earn $61,677.28 more from your Second City Bank account at the end of 8 years.

Solution 2:

Amount at the end of 10 years:

We can use the formula for future value of a present sum of money to calculate the amount you will have in 10 years.

FV = PV(1 + r)^n
FV = 16000(1 + 0.0925)^8
FV = $37,073.51

Therefore, you will have $37,073.51 in ten years.

Suggested Resources/Books:
1. “Business Mathematics” by Gary Clendenen and Stanley A. Salzman
2. “Fundamentals of Financial Management” by Brigham and Houston
3. “Investments: An Introduction” by Herbert B. Mayo

Similar asked questions:
1. What is the difference between compound interest and simple interest?
2. How can I calculate the annual increase in selling price for a house?
3. What is the future value of an investment with a given interest rate and time period?
4. How can I calculate the annual rate of return on an investment?
5. What is the formula for calculating the present value of an investment?

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