Question

Determine the amount of money in a savings account at the end of 10 years, given an initial deposit of $5,500 and a 12 percent annual interest rate when interest is compounded: (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Answer 1

a)	Compounded annually
	PV	5500
	r	0.12
	n	10
	FV= PV*(1+r)^n
	Where,
	FV= Future Value
	PV = Present Value
	r = Interest rate
	n= periods in number
	= $5500*( 1+0.12)^10
	=5500*3.10585
	= $17082.17
b)	Compounded semiannually
	PV	5500
	r	0.06
	n	20
	FV= PV*(1+r)^n
	Where,
	FV= Future Value
	PV = Present Value
	r = Interest rate
	n= periods in number
	= $5500*( 1+0.06)^20
	=5500*3.20714
	= $17639.25
c)	Compounded Quarterly
	PV	5500
	r	0.03
	n	40
	FV= PV*(1+r)^n
	Where,
	FV= Future Value
	PV = Present Value
	r = Interest rate
	n= periods in number
	= $5500*( 1+0.03)^40
	=5500*3.26204
	= $17941.21