Find out the compound interest, Algebra

Assignment Help:

Example: We are investing $100,000 in an account that earns interest at a rate of 7.5%

for 54 months.  Find out how much money will be in the account if,

(a) Interest is compounded quarterly.  

(b) Interest is compounded monthly. 

(c) Interest is compounded continuously.  

Solution

Before getting into each part let's recognize the quantities which we will require in all the parts and won't change.

P = 100, 000   r = 7.5 /100= 0.075    t = 54/12 =4.5

Remember that interest rates have to be decimals for these computations and t has to be in years!

Now, Solve out the problems.

 (a) Interest is compounded quarterly.

In this the interest is compounded quarterly and it means it is compounded 4 times a year. After 54 months then we have,

A = 100000 (1 + (0.075/ 4)( 4)( 4.5)

= 100000 (1.01875)18

=100000 (1.39706686207)

= 139706.686207 = $139, 706.69

Notice the amount of decimal places utilized here. We didn't do any rounding till the very last step. It is significant to not do too much rounding in intermediate steps along with these problems.

 (b) Interest is compounded monthly.

In this compounding monthly and so it means we are compounding 12 times a year.  Following is how much we'll have after 54 months.

A = 100000 (1 + 0.075 /12) (12)( 4.5)

= 100000 (1.00625)54

= 100000 (1.39996843023)

= 139996.843023 = $139, 996.84

Thus, compounding more times per year will yield more money.

 (c) Interest is compounded continuously.

At last, if we continuously compound then after 54 months we will have,

A =100000e(0.075)( 4.5)

= 100000 (1.40143960839)

= 140143.960839 = $140,143.96


Related Discussions:- Find out the compound interest

Draw the graph parabolas, Sketch the graph parabolas. g ( x ) = 3x 2 - ...

Sketch the graph parabolas. g ( x ) = 3x 2 - 6 x + 5 Solution For this parabola we've obtain a = 3 , b = -6 and c = 5 .  Ensure that you're cautious with signs while id

Pythagorean theorem, how do you find the value of x in simplified radical?

how do you find the value of x in simplified radical?

Equation of the golden ratio , plz help me with this : X² = X + 1 find X ,...

plz help me with this : X² = X + 1 find X , help me solve it , all it maters is u put the way , ( How ) , and plz solve it with an easy way !

Differential equations, verify Liouville''s formula for y'''' - y'''' -y'' ...

verify Liouville''s formula for y'''' - y'''' -y'' + y = 0 in (0,1)

Inequalities, Labrador retrievers that compete in field trials typically co...

Labrador retrievers that compete in field trials typically cost $2,000 at birth. Professional trainers charge $400 to $1,000 per month to train the dogs. If the dog is a champion b

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd