2. Find the balance after 5 years if $500 is deposited into an account with an a

Question

2. Find the balance after 5 years if $500 is deposited into an account with an annual interest rate of 3.25%, compounded quarterly.

3. Fine the balance of a 1000 investment, after 10 years, at an annual interest rat3 if 6.5% when compounded.
a. semi annually
b. semi monthly

xponential and Logs WS Name Date COMPOUND INTEREST Use the formula A(t)-P11+? rinc(pal for the following problems. uhded Annually: Semi-annually: Quarterly: Monthly: ns 1 Bi-Monthly Weekly: Daily: kground information: Interest is a charge that you pay for borrowing money, or that the bank pays you for letting m invest the money you keep in your bank account. Simple interest is a percentage paid on the principal, or initial ance, over a period of time. If you leave the interest in the account, then in the next time period you receive interest both the prindipal and the Interest that were in your account. This is called compound interest because you are iving interest on the interest. Ive the following problems. 1. You plan to borrow $22,000 to purchase a new car. The i investment must be paid off in 5 ars (60 months). The bank charges interest at an annual rate of 7.9% compounded monthly. How much do you actually pay for the car at the end of 5 years? t-22,000 (I+ 0 712 32, 014.2 Find the balance after 5 years if $500 is deposited into an account with an annual interest rate of 3.25%, compounded quarterly. Find the balance of a $1000 investment, after 10 years, at an annual interest rate of 6.5% when compounded.. a) Semi-Annually b) Semi-Monthly

Explanation / Answer

Ans 2: $587.83

A = P(1 + R/N)NT = 500 ( 1 + 0.0325 / 4 )(4)(5) = 500 (1.008125)20 = 587.83

Ans 3 a: $1895.83

A = P(1 + R/N)NT = 1000 ( 1 + 0.065 / 2 )(2)(10) = 1000 (1.0325)20 = 1895.83

Ans 3 b: $1915.15

A = P(1 + R/100)NT = 1000 ( 1 + 0.065 / 104 )(104)(10) = 1000 (1.000625)1040 = 1915.15

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