𝐶(?) =
𝑃 (1 +
?
?
)
𝑛
[1 − (1 +
?
?
)
𝑛𝑡
]
1 − (1 +
?
?
)
𝑛
1.
How much will you have accumulated over a period of 35 years if, in an IRA which has
a 8% interest rate compounded monthly, you annually invest:
a.
$1
Data
P=$1
r=0.08
t=35 years
n=1
𝐶(?) = 1 ∗
(1 +
0.08
1
)
1
[1 − (1 +
0.08
1
)
1∗35
]
1 − (1 +
0.08
1
)
1
= $186.102
b.
$1,000
Data
P=$1,000
r=0.08
t=35 years
n=1
𝐶(?) = 1,000 ∗
(1 +
0.08
1
)
1
[1 − (1 +
0.08
1
)
1∗35
]
1 − (1 +
0.08
1
)
1
= $186102.15
c.
$4,500
Data
P=$4,500
r=0.08
t=35 years
n=1
𝐶(?) = 4,500 ∗
(1 +
0.08
1
)
1
[1 − (1 +
0.08
1
)
1∗35
]
1 − (1 +
0.08
1
)
1
= $837459.67
d.
Part (a) is called the effective yield of an account. How could Part (a) be used to
determine Parts (b) and (c)? (Your answer should be in complete sentences free of
grammar, spelling, and punctuation mistakes.)
Part b) can be obtained multiplying the results of Part a) by 1000, and Part c) can be obtained
multiplying this result by 4,500.

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