math110_compound_interest_notes

# E at every given moment in time example suppose 10000

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Unformatted text preview: me) ( ) Example: Suppose \$10,000 is invested at an annual rate of 5% for 10 years. Find the future value if interest is compounded as follows. (a) (b) (c) (d) (e) annually, quarterly, monthly, daily, and continuously. Based on custom edition “Math: Applications for Business.” Prepared and summarized by Vera Klimkovsky. Mathematics of Finance Compound Interest Solution: , , . a) annually m = 1 b) quarterly, m = 4 c) monthly, m = 12 d) daily, m = 365 e) continuously Practice Exercises 1. Find the compound amount for the following deposit: \$470 at 10% compounded semiannually for 12 years. Mathematics: Applications for Business 2. Find the amount of interest earned by the following deposit: \$5124.98 at 6.3% compounded quarterly for 5.2 years. 3. Find the compound amount if \$25,000 is invested at 6% compounded continuously for 15 years. 4. Find the present value of the following future amount: \$4253.91 at 6.8% compounded semiannually for 4 years. Applications Problem Bill Poole wants to have \$20,000 available in 5 years for a down payment on a house. He has inherited \$15,000. How much of the inheritance should he invest now to accumulate the \$20,000, if he can get an interest rate of 8% compounded quarterly? Based on custom edition “Math: Applications for Business.” Prepared and summarized by Vera Klimkovsky....
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## This note was uploaded on 10/19/2011 for the course MATH 110 taught by Professor Staff during the Spring '11 term at S.F. State.

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