SOLUTION: Can someone please help me! 4. You have $760,000 in your bank account. The interest rate in your account is 5%. Solve for the following: a. How much interest will you accumulate

Algebra ->  Logarithm Solvers, Trainers and Word Problems -> SOLUTION: Can someone please help me! 4. You have $760,000 in your bank account. The interest rate in your account is 5%. Solve for the following: a. How much interest will you accumulate       Log On


   

Question 172750: Can someone please help me!
4. You have $760,000 in your bank account. The interest rate in your account is 5%. Solve for the following:
a. How much interest will you accumulate if interest is compounded annually over the next five years?
b. How much interest will you earn in your account over the next five years with continuous compounding?
You can use a scientific calculator or the =Exp() function in Microsoft Excel.
Answer by jojo14344(1513) About Me  (Show Source):
You can put this solution on YOUR website!
F=P%281%2B%28i%2Fm%29%29%5E%28nm%29 ----------> Working eqn
Remember: system%28F=FutureSavings%2CP=Principal%2Ci=Interest%2Cm=Compounded%2Cn=years%29
a) m=1, compounded annually
F=760000%281%2B0.05%29%5E5
F=760000%281.2762816%29
F=969973.99
Total Interest: F-P=969973.99-760000=$209,973.99, Answer
.
b) m=365, compounded continuosly/daily
F=760000%281%2B%280.05%2F365%29%29%5E%285%2A365%29
F=760000%281.000137%29%5E1825
F=975842.61
Total Interest: F-P=975842.61-760000=$215,842.61, Answer
.
Thank you,
Jojo