shaylee112
New member
- Joined
- Nov 1, 2005
- Messages
- 22
You have $380,000 in your bank account. The interest rate in your account is 5%. Solve for the following:
a. How much interest will you accumulate if interest is compounded annually over the next five years?
380000(1+.05/1)^(1*5)
= 380000(1+.05)^5
= 380000(105)^5
= 380000(1.2763)
= 484986.99, total money at end
484986.99-380000 = $104986.99, interext accumulated
b. How much interest will you earn in your account over the next five years with continuous compounding? You can use a scientific calculator or the =Exp() function in Microsoft Excel. If you are crafty you can also find web pages that will do the calculations for you. Regardless, show your steps and your work.
380000e^(0.05*5)
= 380000e^.25
= 380000*1.2840
= 487929.66 , total at end
487929.66 – 380000 = $107929.66, interest earned
a. How much interest will you accumulate if interest is compounded annually over the next five years?
380000(1+.05/1)^(1*5)
= 380000(1+.05)^5
= 380000(105)^5
= 380000(1.2763)
= 484986.99, total money at end
484986.99-380000 = $104986.99, interext accumulated
b. How much interest will you earn in your account over the next five years with continuous compounding? You can use a scientific calculator or the =Exp() function in Microsoft Excel. If you are crafty you can also find web pages that will do the calculations for you. Regardless, show your steps and your work.
380000e^(0.05*5)
= 380000e^.25
= 380000*1.2840
= 487929.66 , total at end
487929.66 – 380000 = $107929.66, interest earned
