Find out the compound interest, Algebra

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.  


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

Posted Date: 4/8/2013 3:40:13 AM | Location : United States

Related Discussions:- Find out the compound interest, Assignment Help, Ask Question on Find out the compound interest, Get Answer, Expert's Help, Find out the compound interest Discussions

Write discussion on Find out the compound interest
Your posts are moderated
Related Questions

4(3x-2) -5(x+1)=6-(4x-3)

using T for term- p T-1,2,3,4,5,6 = 8,16,24,32,40. Formula is T x _ +_=8, T x_+_=16 etc same 2 numbers must be used. how do i figure this out? an brackets be used or minus?

Sabrina invested 1500000 in stocks and bonds.Her investment in bonds in 5000 more than half her investment in stocks.How much did she invest in each ?

Step by step help on how to solve p to the second power plus 2p-8 over p to the second power-2p+1 multiplied by p-1 over p-2

We will begin with inequalities that only have a single inequality in them.  The thing that we've got to keep in mind here is that we're asking to find out all the values of the

what is the expression. Of 1=1/2n(3n-1)