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Unformatted text preview: interest is compounded monthly. [Solution]
(c) interest is compounded continuously. [Solution]
Before getting into each part let’s identify the quantities that we will need in all the parts and
won’t change. P = 100, 000 r= 7.5
100 t= 54
12 Remember that interest rates must be decimals for these computations and t must be in years!
Now, let’s work the problems.
(a) Interest is compounded quarterly.
In this part the interest is compounded quarterly and that means it is compounded 4 times a year.
After 54 months we then have, æ 0.075 ö
A = 100000 ç1 +
è ( 4)( 4.5) = 100000 (1.01875 ) 18 = 100000 (1.39706686207 )
= 139706.686207 = $139, 706.69
Notice the amount of decimal places used here. We didn’t do any rounding until the very last
© 2007 Paul Dawkins 308 http://tutorial.math.lamar.edu/terms.aspx College Algebra step. It is important to not do too much rounding in intermediate steps with these problems.
[Return to Problems] (b) Interest is compounded monthly.
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This note was uploaded on 06/06/2012 for the course ICT 4 taught by Professor Mrvinh during the Spring '12 term at Hanoi University of Technology.
- Spring '12