Compound Interest. Use the compound interest formula from EXAMPLE for Exercise. Round to the nearest cent.
Suppose that $7550 is invested at 2.8%, compounded semiannually. How much is in the account at the end of 5 years?
EXAMPLE Compound Interest. If a principal P is invested at an interest rate r, compounded n times per year, in t years it will grow to an amount A given by
Suppose that $1250 is invested at 4.6% interest, compounded quarterly. How much is in the account at the end of 8 years?
Solution We have P = 1250, r = 4.6%, or 0.046, n = 4, and t = 8. Substituting, we find that the amount in the account at the end of 8 years is given by
Next, we evaluate this expression:
The amount in the account at the end of 8 years is $1802.26. The TVM SOLVER option in the FINANCE APP on a graphing calculator can be used to do this computation.
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