6. Invest $10,000 into aCD(Certificate ofDeposio account with APR 390% will the

Question

6. Invest $10,000 into aCD(Certificate ofDeposio account with APR 390% will the CD be worth in 10 yea 6h. How much interest will 7. Suppose you know you will neod $20,000 in eight years. How much should you put into an account paying (compounding quarterly) so that you will have the $20,000 eight years from now? Bernard deposits S 16,000 in a savings account that compounds imerest annually at an APR of 4% Carla deposits $14,000 in an Who will have more money after 20 years? 8. account that gives 5% compounded daily. Who will have more money after years? Bernard Carla (Extra Credit challenge) If I want my $12,600 to grow to $20,000 in ten years, what interest rate do I need if the money is compounded monthly? 9. 10. (super awesome challenge) How long will it take S 10,000 to grow to S 15,000 at 4% compounded monthly?

Explanation / Answer

10

we know that

The formula for annual compound interest, including principal sum, is:
A = P (1 + r/n) (nt)

A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for

here we need to calculate t

A = 15000
P= 10000
r = 0.04
n = 12 , as compunded monthly

A = P (1 + r/n)^(nt)

15000 = 1000(1+0.04/12)^(12t)
15000 = 103.33^(12t)

solve for t to get
t = 10.15 years

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