Question 129418: I need help with this question
Suppose $10,000 is invested at an annual rate of 5% for 10 years. I need to find the future value if interest is compounded as follows:
a) quarterly
b) monthly
c) daily (365 days)
Answer by checkley71(8403)   (Show Source):
You can put this solution on YOUR website! P(1+R/n)^nT P=PRINCIPAL, R=RATE, N= NUMBER OF PERIODS PER YEAR, T=NUMBER OF YEARS.
A) 10,000(1+.05/4)^4*10
10,000(1+.0125)^40
10,000(1.0125)^40
10,000*1.6436
16,436 THE VALUE OF THIS INVESTMENT AFTER 10 YEARS COMPOUNDED QUARTERLY.
B) 10,000(1+.05/12)^12*10
10,000(1+.00417)^120
10,000(1.00417)^120
10,000*1.6477
16,477 INVESTMENT AFTER 10 YEARS OF MONTHLY COMPOUNDING.
C) 10,000(1+.05/365)^365^10
10,000(1+.0001369)^3650
10,000(1.0001369)^3650
10,000*1.648146
16,481.46 INVESTMENT AFTER 10 YEARS OF DAILY COMPOUNDING.
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