![\"\"](\"/images/stars/stars-13.gif\")
You can put this solution on YOUR website!
If 8700 dollars is invested at an interest rate of 8 percent per year, find the value of the investment at the end of 5 years for the following compounding methods.
\n" ); document.write( ":
\n" ); document.write( "If know a couple interest formulas, you would not be desperate
\n" ); document.write( "A = P^nt
\n" ); document.write( "Where
\n" ); document.write( "A = resulting amt
\n" ); document.write( "P = initial amt
\n" ); document.write( "r = annual interest rate in decimals
\n" ); document.write( "n = no. of compounding periods per year
\n" ); document.write( "t = no. of years
\n" ); document.write( ":
\n" ); document.write( "Annual: that's once a year, n=1
\n" ); document.write( "A = 8700^(1*5)
\n" ); document.write( "A = 8700*1.08^5
\n" ); document.write( "A = $12,783.15
\n" ); document.write( ":
\n" ); document.write( "Semiannual: that's twice a year, n=2
\n" ); document.write( "A = 8700^(2*5)
\n" ); document.write( "A = 8700*1.04^10
\n" ); document.write( "A = $12,878.13
\n" ); document.write( ":
\n" ); document.write( "Monthly: n=12
\n" ); document.write( "A = 8700^(12*5)
\n" ); document.write( "A = 8700*1.00667^60
\n" ); document.write( "A = $12,964.23, not an exact value here, due to rounding 1.00666666
\n" ); document.write( ":
\n" ); document.write( "Daily: n = 365
\n" ); document.write( "A = 8700^(365*5)
\n" ); document.write( "A = 8700*1.00021918^1825
\n" ); document.write( "A = $12,978.35
\n" ); document.write( ":
\n" ); document.write( "Continuously:
\n" ); document.write( "This involves a simpler formula A = P*e^rt, where r = int rate, t = time in yrs
\n" ); document.write( "A = 8700*e^(.08*5)
\n" ); document.write( "A = 12,978.87 \n" ); document.write( "