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.  

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

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
A blue whale gains 2.3 tons a month for the first year of life. If a blue whale weighed 15 tons at birth, how much will it weigh on its first birthday?

math help



Ask question #MA survey of 400 of recently qualified chartered Accountant revealed that 112 joined industry, 120 stated practice & 160 joined the firms of practicing chartered acco

I am looking the domain of g^2-6g-55/g. The denominator here can be also be written as 1g, right?

What two numbers multiplied equal 216 but added together equal -42?

In this section we are going to solve inequalities which involve rational expressions. The procedure for solving rational inequalities is closely identical to the procedure for sol

how do you solve 9/x=4/12

I am a first time algebra student and am confused. Can you give me step by step equations on how to calculate 5+2x=2x+6