Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.4 Compound Interest - Exercise Set 8.4 - Page 521: 14

Answer

(a) After 10 years, there will be \$9479.19 in the account. (b) After 10 years, there will be \$9527.79 in the account. (c) After 10 years, there will be \$9560.92 in the account. (d) After 10 years, there will be \$9577.70 in the account.

Work Step by Step

We can use this formula: $A = P~(1+\frac{r}{n})^{nt}$ $A$ is the final amount in the account $P$ is the principal (the amount of money invested) $r$ is the interest rate $n$ is the number of times per year the interest is compounded $t$ is the number of years (a) $A = P~(1+\frac{r}{n})^{nt}$ $A = (\$5,000)~(1+\frac{0.065}{2})^{(2)(10)}$ $A = \$9479.19$ After 10 years, there will be \$9479.19 in the account. (b) $A = P~(1+\frac{r}{n})^{nt}$ $A = (\$5,000)~(1+\frac{0.065}{4})^{(4)(10)}$ $A = \$9527.79$ After 10 years, there will be \$9527.79 in the account. (c) $A = P~(1+\frac{r}{n})^{nt}$ $A = (\$5,000)~(1+\frac{0.065}{12})^{(12)(10)}$ $A = \$9560.92$ After 10 years, there will be \$9560.92 in the account. (d) If the money is compounded continuously, we can use this formula: $A = P~e^{rt}$ $A = (\$5,000)~e^{(0.065)(10)}$ $A = \$9577.70$ After 10 years, there will be \$9577.70 in the account.
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.