You have $7,700 to deposit. Regency Bank offers 9 percent per year compounded mo

Question

You have $7,700 to deposit. Regency Bank offers 9 percent per year compounded monthly (.75 percent per month), while King Bank offers 9 percent but will only compound annually.

How much will your investment be worth in 20 years at each bank? (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

You have $7,700 to deposit. Regency Bank offers 9 percent per year compounded monthly (.75 percent per month), while King Bank offers 9 percent but will only compound annually.

Explanation / Answer

Regency Bank:

Monthly compounding rate = 0.75% per month

No. of months = 20 * 12 = 240 months

Amount after 240 months = 7700 * (1+0.75/100)240 = 7700* (1.0075240) = 7700 * 6.009152 = $46,270.47

King Bank:

Annual compounding rate = 9%

Amount after 20 years = 7700 * (1+9/100)20 = 7700 * 1.0920 = 7700 * 5.6044 = $43,153.96

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.