A.) Sarah opens an investment account with an initial deposit of $ 1900. She the
ID: 2715545 • Letter: A
Question
A.) Sarah opens an investment account with an initial deposit of $ 1900. She then sets up monthly deposits of $ 100 to the account. If the account earns 4.5% interest compounded monthly, how much money will she have in the account in 4 years?
Total after 4 years =
B.) Hannah wants to have $ 3500 to help pay for a new deck in 10 years. If she wants to put her money into an account earning 4.75% interest compounded continuously, how much should she invest now, so that she will have $ 3500 in 10 years?
Payment amount =
Explanation / Answer
A)
Total after 4 years = initial deposit*(1+r/12)^12n + monthly deposits*((1+r/12)^12n-1)/(r/12)
Total after 4 years = 1900*(1+4.5%/12)^(12*4) + 100*((1+4.5%/12)^(12*4) -1)/(4.5%/12)
Total after 4 years = $ 7522.33
B)
Payment amount = Amount Required/ert
Payment amount = 3500/ e4.75%*10
Payment amount = 3500/2.718281828459^(4.75%*10)
Payment amount = $ 2176.60
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