Question 20719: Five years ago, $10000 was invested at 6%/a compounded semi-annually. Today the investment rates have risen to 7%/a compounded annually. If the original investment and accumulated interest is rolled into the new investment conditions, how much will it be worth in five years.
Use A=P(1+i)^n
I know for 6% P=10000, i = 0.03 but I don't know what n =?
I know for 7% P=10000, i = 0.07 But I don't know what n =?
Answer by venugopalramana(3286)   (Show Source):
You can put this solution on YOUR website! SEE MY COMENTS IN CAPITAL LETTERS
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> Five years ago, $10000 was invested at 6%/a
> compounded semi-annually. Today
> the investment rates have risen to 7%/a compounded
> annually. If the original
> investment and accumulated interest is rolled into
> the new investment
> conditions, how much will it be worth in five years.
>
> Use A=P(1+i)^n..HERE
A=AMOUNT=PRINCIPAL+INTEREST..P=PRINCIPAL
YOU USED I FOR RATE PER TERM PER DOLLAR.. WE USE R FOR
RATE AND I FOR INTEREST..N=NUMBER OF TERMS...
> I know for 6% P=10000,CORRECT i = 0.03 VERY GOOD..IT
IS RATE PER TERM HERE TERM IS SEMIANNUAL SO INTERET
RATE IS HALF OF 6% THAT IS 3% THAT IS = 0.03 PER
DOLLAR..but I don't know
> what n =? AS I SAID N = NUMBER OF TERMS FOR 5 YEARS
=10 HALF YEARS....SO N=10
> I know for 7% P=10000,NO...IT IS ACUMULATED INTEREST
AND PRINCIPAL..SO YOU SHOULD USE A OBTAINED FROM ABOVE
CALCULATION AS P HERE. i = 0.07 VERY GOOD..But I don't
know
> what n =?..N=5 IN THIS CASE AS NUMBER OF TERMS IN 5
YEARS IS 5.
> NOW FIND A USING THE ABOVE VALUES.
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