6.7 Compound Interest

# 6.7 Compound Interest - 1. monthly. 2. daily 3....

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6.7: Compound Interest Future Value Formulas , where P = principal (original amount borrowed or invested), r = annual rate of interest expressed as a decimal, t = time in years; I = interest accrued; A = principal plus interest; n = number of compounding periods per year : Simple interest : I = Prt. Compound Interest : A = nt n r P + 1 . Continuous Compounding Interest : A = P e rt . Effective rate of interest is the equivalent annual simple interest that would yield the same amount as compounding after 1 year. Present Value Formulas: Compound Interest : P = nt n r A - + 1 ; Continuous compounding : P = Ae - rt . Find the future value of \$2500 invested at 10% for 7 years compounded:

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Unformatted text preview: 1. monthly. 2. daily 3. continuously. Find the effective rate of interest for 9% compounded: 4. quarterly 5. semi-annually 6. continuously What principal invested at 12% will yield \$1000 after 5 years compounded: 7. monthly 8. continuously How long will it take \$500 to double if it is invested at 10% compounded: 9. quarterly 10. continuously Try These 11 If \$100,000 is invested at 12% compounded continuously, how much will it be worth in 3 years? 12. How much should be invested at 7.5% compounded monthly in order to have \$500,000 in 40 years . 13. How long will it take money to triple if it is invested at 6% compounded weekly?...
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## This note was uploaded on 01/04/2012 for the course MAC 1147 taught by Professor Staff during the Fall '08 term at Miami Dade College, Miami.

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6.7 Compound Interest - 1. monthly. 2. daily 3....

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