Exam 1 Math 128 Exam 1 Spring 2017 like to save it to you received a gift from y

Question

Exam 1 Math 128 Exam 1 Spring 2017 like to save it to you received a gift from your grandparents and would the money you can buy a car when you graduate a). into an account earning 5% interest, compounded quarterly, for 6 years. ate the compound amount of your investment. (Round your answer to two decimal places.) (8 points) b). In what range did you expect the compound amount to be? Explain. (Is your answer reasonable? Why?) (5 points) c), How much interest will be earned (Round your final answer to two decimal places. (5 points)

Explanation / Answer

a.
Effective rate is 5/4 % = 1.25%
Period = 6 years *4 = 24 quarters

Now, applying CI formula

Pfuture = Ppresent(1+r)^t

=10000(1+.0125)^24

=$13473.5

This is compounded amount

b. So, if you do 5 % for 6 years simple intereset = 30% on your 10000, since compuding ampunt will always be more than simple intereset I expected the compunded amount to be more than 13000.

c. Interest is $13473.51 -$10000 = $3473.51

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

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