Question 202203
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You need the following formula:


*[tex \LARGE \ \ \ \ \ \ \ \ \ \ FV = P\cdot(1 + r)^n]


Where *[tex \Large FV] is the future value, *[tex \Large P] is the beginning principal, *[tex \Large r] is the annual interest rate (expressed as a <b><i>decimal</i></b>), and *[tex \Large n] is the number of years.


So, for your first problem:


*[tex \LARGE \ \ \ \ \ \ \ \ \ \ FV = 5000\cdot(1 + 0.10)^{10}]


Start punching buttons on your calculator.


By the way, the answer you did give for #1 is WAY out in outer space somewhere.  I tried but I can't figure out how you got there.  Suffice it to say that to turn $5K into $890K in 10 years you would need to be earning something like 68% interest.


You can use the same formula for the other three problems.


The general formula for interest compounded at other periodicities is:


*[tex \LARGE \ \ \ \ \ \ \ \ \ \ FV = P\cdot(1 + \frac{r}{n})^{nt}]


Where *[tex \Large FV] is the future value, *[tex \Large P] is the beginning principal, *[tex \Large r] is the annual interest rate, *[tex \Large n] is the number of compounding periods per year and *[tex \Large t] is the number of years.


Or, for continuous compounding:


*[tex \LARGE \ \ \ \ \ \ \ \ \ \ FV = Pe^{rt}]


Where *[tex \Large FV] is the future value, *[tex \Large P] is the beginning principal, *[tex \Large e] is the base of the natural logarithms (*[tex \Large \approx 2.718]), *[tex \Large r] is the annual interest rate, and *[tex \Large t] is the number of years.



John
*[tex \LARGE e^{i\pi} + 1 = 0]
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