Question

If 39,100 dollars is invested at an interest rate of 7 percent per year, find the value of the investment at the end of 5 years for the following compounding methods. (a) Annual: Your answer is (b) Semiannual: Your answer is (c) Monthly: Your answer is (d) Daily: Your answer is (e) Continuously: Your answer is

Answer 1

Answer:

Explanation:

The detailed step by step calculation is as shown in the attachment using the formula ; A = P( 1 + r/n)^nt

A = resulting amount

P = initial amount

n = number of corresponding period per year

r = interest rate

t = no of years

Answer 2

Answer:

Explanation:

using the compound formula that is = S=p(1+i)^n

S is the future payment

P is the current investment

I is the rate of return

N is the time period

(a) Annual

S=p(1+i)n

S=39100(1+7%)^5

S=39100*1.402551731

S=54839.77267

(b) Semiannual:

Rate semi annualy = 7%*/2 = 3.5%

N total payments = 5*2 = 10

S=p(1+i)n

S=39100(1+3.5%)^10

S=39100*1.410598761

S=55154.41154

(c) Monthly:

Rate monthly = 7%*/12 = 0.5833%

N total payments in months = 5*12 = 60

S=p(1+i)n

S=39100(1+%)^60

S=39100*1.417597072

S=55428.04551

(d) Daily:

Rate monthly = 7%*/365 = 0.0192%

N total payments in months = 5*365 = 1825

S=p(1+i)n

S=39100(1+0.0192%)^1825

S=39100*55505.87288

S=55505.87288

(e) Continuously

S=p/i

S=39100/0.07

S=558571.4286