SOLUTION: A young man is the beneficiary of a trust fund established for him 16 yr ago at his birth. If the original amount placed in trust was $40,000, how much will he receive if the money

Question 507519: A young man is the beneficiary of a trust fund established for him 16 yr ago at his birth. If the original amount placed in trust was $40,000, how much will he receive if the money has earned interest at the rate of 9%/year compounded annually? Compounded quarterly? Compounded monthly? (Round your answers to the nearest cent.)

compounded annually ?
compounded quarterly ?
compounded monthly ?

Answer by Earlsdon(6294) (Show Source): You can put this solution on YOUR website!
You can use the compound interest formula to get your answers:

A = The present amount (your answer).
P = the principal amount invested (P = $40,000).
i = the rate of interest, expressed as a decimal (i = 0.09).
q = The number of compounding periods per year (q = 1 for annually, 4 for quarterly, and 12 for monthly).
n = number of years (n = 16).
Compounded annually:
Substitute P = 40000, i = 0.09, q = 1 (once per year), and n = 16:
Use your calculator.

A = $158,812.24
Compounded quarterly:
Substitute P = 40000, i = 0.09, q = 4 (4 times per year), and n = 16.
Use your calculator.

A = $166,154.56
You should now be able to do the last one yourself using the same formula and the same numbers except that q = 12 (for 12 times per year).
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