SOLUTION: Jody invests $4000 at 4.5% interest and plans to leave it for 10 years. (Round your final answers to two decimal places.) (a) Find the value after 10 years if the interest paid

Algebra ->  Finance -> SOLUTION: Jody invests $4000 at 4.5% interest and plans to leave it for 10 years. (Round your final answers to two decimal places.) (a) Find the value after 10 years if the interest paid       Log On


   

Question 1150339: Jody invests $4000 at 4.5% interest and plans to leave it for 10 years. (Round your final answers to two decimal places.)
(a) Find the value after 10 years if the interest paid is simple interest.
(b) Find the value after 10 years if the interest paid is compounded quarterly.
Answer by ikleyn(52925) About Me  (Show Source):
You can put this solution on YOUR website!
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(a)  Use the formula  


         FV = D*(1+r*t),


    where D is the one time deposit value (starting amount); r is the annual interest rate expressed as decimal; 
    t is time in years:


         FV = 4000*(1+0.045*10) = 5800 dollars.     ANSWER


(b)  Use the formula  


         FV = D%2A%281%2Br%2F4%29%5E%284n%29,


    where D is the one time deposit value (starting amount); r is the annual interest rate, expressed as decimal; 
    n is the number of years:


         FV = 4000%2A%281%2B0.045%2F4%29%5E%284%2A10%29 = 6257.50 dollars.     ANSWER

Solved.

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