?(Compound interest with? non-annual periods)??Calculate the amount of money tha

ID: 1172009 • Letter: #

Question

?(Compound interest with? non-annual periods)??Calculate the amount of money that will be in each of the following accounts at the end of the given deposit? period:

The amount of money for Theodore at end of 10 years is ___?

The amount of money for Vernell at end of 3 years will be ___?

The amount of money for Tina at end of 4 years will be ___?

The amount of money for Wayne at end of 3 years will be ___?

The amount of money for Eunice at end of 4 years will be _____?

Account Holder Amount Deposited Annual
Interest Rate Compounding
Periods Per Year (M) Compounding
Periods (Years) Theodore Logan III $1,000 18% 3 10 Vernell Coles $96,000 10% 2 3 Tina Elliot $9,000 12% 4 4 Wayne Robinson $121,000 12% 12 3 Eunice Chung $30,000 18% 1 4 Kelly Cravens $15,000 12% 6 3

Explanation / Answer

Account Holder

Amount Deposited

Annual

Compounding

rate = annual rate/compounding period in a year

Period n = times compounding per year*no of years

Future value = pv*(1+r)^n

Future value

Interest Rate

Periods Per Year (M)

Periods (Years)

Theodore Logan III

$1,000

18%

18/3 = 6%

10*3 = 30

1000*(1.06)^30

5743.491

Vernell Coles

$96,000

10%

10/2 =5%

3*2 = 6

96000*(1.05)^6

128649.2

Tina Elliot

$9,000

12%

12/4 =3%

4*4 = 16

9000*(1.03)^16

14442.36

Wayne Robinson

$121,000

12%

12/12 = 1%

12*3 = 36

121000*(1.01)^36

173123

Eunice Chung

$30,000

18%

18/1 = 18%

1*4 = 4

30000*(1.18)^4

58163.33

Kelly Cravens

$15,000

12%

12/6 = 2%

TRUE

15000*(1.02)^18

21423.69