SOLUTION: 1. Ellen has $8000 to invest in an RESP (Registered Education Savings Plan) for 7 years. Should she invest her $8000 at 6% compounded semi-annually or should she invest her $8000 a
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Question 1046232: 1. Ellen has $8000 to invest in an RESP (Registered Education Savings Plan) for 7 years. Should she invest her $8000 at 6% compounded semi-annually or should she invest her $8000 at 7.5% with simple interest? Explain your choice. Identify the function, in each case.
2.Adam is saving for a down payment on a house. How much must he invest now, in one lump sum, in order to have $20 000 at the end of 5 years? Assume the annual interest rate 6.25% compounded monthly.
3. Determine the time it takes to double an investment in an account that pays interest of 4% per annum, compounded quarterly.
Answer by josmiceli(19441) (Show Source): You can put this solution on YOUR website!
(1)
Formula for compound interest:
-----------------
---------------------------
Formula for simple interest:
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The investment at 7.5% simple interest
gives her more return
more in 7 yrs
---------------------
(2)
she should invest $14,644.18 now
--------------------------------
(3)
Take the log base 10 of both sides
it will take about 17 yrs and 5 months
to double an investment
-------------------------
check answer:
close enough
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