SOLUTION: Jessica invested £14000 for 5 years at a compound interest rate of 9% per year. How much more could she have earned if the interest was compounded monthly ?
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Question 936035: Jessica invested £14000 for 5 years at a compound interest rate of 9% per year. How much more could she have earned if the interest was compounded monthly ? Found 2 solutions by stanbon, TimothyLamb:Answer by stanbon(75887) (Show Source):
You can put this solution on YOUR website! Jessica invested £14000 for 5 years at a compound interest rate of 9% p.a.
How much more could she have earned if the interest was monthly ?
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Yearly Compounding :: 14000(1+(0.09/1))^(1*5) = 21540.74
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Monthly Compounding :: 14000(1+(0.09/12))^(12*5) = 21919.53
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Ans: 21919.53-21540.74 = 378.79
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Cheers,
Stan H.
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You can put this solution on YOUR website! compound-interest formula:
v = p( 1 + (r/n) )^(nt)
where:
v = final value
p = initial (principal) value
r = interest rate (as a decimal)
n = number of compounding periods per year
t = number of years
---
yearly compounding:
a = 14000( 1 + (0.09/1) )^(1*5)
a = 21540.74
---
monthly compounding:
b = 14000( 1 + (0.09/12) )^(12*5)
b = 21919.53
---
b - a = 21919.53 - 21540.74
b - a = 378.79
---
answer:
she could have earned 378.79 more with monthly compounding
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