The article discusses income inequality, and for some people this means a more equitable distribution of income is needed in the
1 answer:
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Answer:
2.96% will be effective rate of the investment
Explanation:
First year:
1,000 x 1 + 10%) = 1,100
<em><u>Second year: </u></em>
1,100 + 3,000 = 4,100 invesmtent balance
4,100 x (1 - 5%) = 3,895
<em><u>Third year:</u></em>
3,895 + 2,000 = 5,895
5,895 x (1 + 2%) = 6012.9
<em><u>Fourth year:</u></em>
6012.9 + 500 = 6512.9
6,512.9 x (1+ 8%) = 7033.932
We calcualte rate that is equivalent with the following cash flow:
We solve using excel goal seek
0.029646151
The compound interest formula is: 
Where:
A is the amount you will have.
P is the money you are investing.
r: is the interest rate (in decimals)
n: number of times the interest is compounded per year
t: time (in years)
The first thing is converting the rate from percentage to decimal:
Since the interest is compounded every month and a year has 12 months n=12.
Now we can replace the values in our formula:
We can simplify the exponents to get:
Finally, we can use our calculator to get 288463.33
After 18 your balance in your bank account will be $288463.33
Where:
A is the amount you will have.
P is the money you are investing.
r: is the interest rate (in decimals)
n: number of times the interest is compounded per year
t: time (in years)
The first thing is converting the rate from percentage to decimal:
Since the interest is compounded every month and a year has 12 months n=12.
Now we can replace the values in our formula:
We can simplify the exponents to get:
Finally, we can use our calculator to get 288463.33
After 18 your balance in your bank account will be $288463.33