SOLUTION: If 38800 dollars is invested at an interest rate of 5 percent per year, find the value of the investment at the end of 5 years for the following compounding methods, to the nearest

Algebra ->  Equations -> SOLUTION: If 38800 dollars is invested at an interest rate of 5 percent per year, find the value of the investment at the end of 5 years for the following compounding methods, to the nearest      Log On


   

Question 1198943: If 38800 dollars is invested at an interest rate of 5 percent per year, find the value of the investment at the end of 5 years for the following compounding methods, to the nearest cent.
a(annual)
b(semiannual)
c(monthly)
d(daily)
Answer by MathLover1(20850) About Me  (Show Source):
You can put this solution on YOUR website!
Compound Interest Formula
FV+++=+++P+%281++%2B++r+%2F+n%29%5E%28Yn%29
where P+is the starting principal, r+is the annual interest rate, Y+is the number of years invested, and n is the number of compounding periods per year.
FV is the future value, meaning the amount the principal grows to after Y years.


a(annual)
FV+=+P+%281+%2B+r%2Fn%29%5E%28Y%2An%29
P=38800
r=0.05
n=1
Y=5

FV++=+38800+%281+%2B+0.05%2F1%29%5E%285%2A1%29
FV+++=+++38800+%281.0+%29%5E5
FV+++=+++38800+%281.2762815625+%29
FV+++=+++49519.72


b(semiannual)
FV+++=+++P+%281++%2B++r+%2F+n%29%5E%28Y%2An%29
P=38800
r=0.05
n=2
Y=5

FV+++=+++38800+%281++%2B+0.05+%2F+2%29%5E%285%2A2%29
FV+++=+++38800+%281.025%29%5E10
FV+++=+++38800+%281.2800845441963566%29
FV+++=+++49667.28


c(monthly)
FV+++=+++P+%281++%2B++r+%2F+n%29%5E%28Y%2An%29
P=38800
r=0.05
n=12
Y=5

FV+++=+++38800+%281++%2B+0.05+%2F+12%29%5E%285%2A12%29
FV+++=+++38800+%281.0041666666666667%29%5E60
FV+++=+++38800+%281.2833586785%29
FV+++=+++49794.32


d(daily)
FV+++=+++P+%281++%2B++r+%2F+n%29%5E%28Y%2An%29
P=38800
r=0.05
n=365
Y=5

FV+++=+++38800+%281++%2B+0.05+%2F+365%29%5E%285%2A365%29
FV+++=+++38800+%281.0001369863013698%29%5E1825
FV+++=+++38800+%281.28400343214692876%29
FV+++=+++49819.33