Use the compound interest formulas A = P (1+ r/n)^nt and A =Pe^rt...

Question

Use the compound interest formulas A = P (1+ r/n)^nt and A =Pe^rt to solve exercises 53-56. Round answers to the nearest cent. 
Find the accumulated value of an investment of $10,000 for 5 years at an interest rate
of 1.32% if the money is
a. compounded semiannually;
b. compounded quarterly;
c. compounded monthly;
d. compounded continuously.

Accepted Answer

Hey everyone here we are asked to use the compound interest formula which is A. Is equal to p times the quantity of one plus R divided by N. To the quantity of end times T. To solve the given problem. So all we have to do is find the value from the problem for each of these variables. So beginning with value for P. Which is our principal amount or the initial deposited amount. We are told that we initially deposit $8000. So P is simply 8000 And next our is our interest rate. And we are told we have an interest rate of 1.18%. Well so we know our is 1.18%. But we want to in decimal notation so 1.18% is simply 0.0118. And now we can find N. Well N is the amount of times the interest is compounded in a year. And we're told that it's compounded monthly. Well there's 12 months in a year. So it's compounded 12 times. Therefore N is 12. And next we have to find T. And T. Is the in years and were told to find the value after 10 years. So we know that T. Is 10. And now we can simply substitute in each of these values into the formula to find our result. So we have a. Is equal to P which is 8000 times the quantity of one plus R. Which is 0.118 divided by N. Which is 12 to the power of N. Which is 12 times T, which is 10. And plugging it into your calculator, you will find the answer of $9001.43 which is our answer here for choice B. Thanks for watching. I hope you found this video helpful, and I'll see you again next time.

My Courses

Chemistry

Biology

Math

Physics

Business

Social Sciences

Programming

Product & Marketing