Find the accumulated value of an investment of $ 20 comma 000 for 5 years at an interest rate of 6.5 % if the money is a. compounded semiannually; b. compounded quarterly; c. compounded monthly d. compounded continuously.

a. $27,538

b. $27,608

c. $27,662

d. $54,366

Explanation:

Future value of the investment is the sum of principal value and interest value including its compounding effect.

Use following formula of FV to calculate the Value of Investment.

FV = PV x ( 1 + r )^n

As per given data

PV = $20,000

Number of years = 5 years

r = 6.5%

FV = ?

a. compounded semiannually

n = 5 x 2 = 10 compounding periods

r = 6.5% / 2 = 3.25%

FV = $20,000 x ( 1 + 3.25% )^10 = $27,538

b. compounded quarterly

n = 5 x 4 = 20 compounding periods

r = 6.5% / 4 = 1.625%

FV = $20,000 x ( 1 + 1.625% )^20 = $27,608

c. compounded monthly

n = 5 x 12 = 60 compounding periods

r = 6.5% / 12 = 0.542%

FV = $20,000 x ( 1 + 0.542% )^60 = $27,662

d. compounded continuously.

FV   =   Pe^Yr = $20,000 x 2.71828 = $54,366

2.71828 is a constant value for continuous compounding

A) $27,537.89

B) $27,608.40

C) $27,656.90

D) $27,680.61

Explanation:

present value = $20,000

n = 10 , 20 , 60

i = 3.25% , 1.625% , 0.5417%

a. compounded semiannually;

future value = $20,000 x 1.0325¹⁰ = $27,537.89

b. compounded quarterly;

future value = $20,000 x 1.01625²⁰ = $27,608.40

c. compounded monthly

future value = $20,000 x 1.005417⁶⁰ = $27,656.90

d. compounded continuously.

A = Peˣⁿ

where:

A = $20,000 x 2.71828⁰°⁰⁶⁵ˣ⁵ = $20,000 x 2.71828⁰°³²⁵ = $20,000 x 1.384 = $27,680.61

A security

Explanation:

A bill of lading is defined as a document that is issued by a ship or carrier as confirmation of goods for shipping.

When an exporter wants to show he has a transaction with an importer the bill of lading shows evidence of goods transfer.

Bill of lading can be negotiable or non negotiable.

The to order bill of lading allows the exporter meet a local bank to collect loans pending when payment is recieved for the goods sent

In this scenario Pro-Racquets has a bill of lading for an order of 10,000 tennis rackets it will be exporting to a foreign distributor, and is using it to obtain a bill of money from a local bank. They are using the bill of lading as security to obtain a loan