Question

a. Suppose we had $15,192 cash and invested it in the bank at 16 percent interest, how much would you have at the end of 1, 2, 3, 4 years, assuming annual compounding?

Answer 1

Answer:

Part a) $\ 17,622.72$

Part b) $\ 20,442.36$

Part c) $\ 23,713.13$

Part d) $\ 27,507.23$

Step-by-step explanation:

we know that  

The compound interest formula is equal to

$A=P(1+\frac{r}{n})^{nt}$

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest  in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

Part a) How much would you have at the end of 1 year?

in this problem we have

$t=1\ years\\ P=\ 15,192\\ r=0.16\\n=1$

substitute in the formula above

$A=15,192(1+\frac{0.16}{1})^{1*1}=\ 17,622.72$

Part b) How much would you have at the end of 2 year?

in this problem we have

$t=2\ years\\ P=\ 15,192\\ r=0.16\\n=1$

substitute in the formula above

$A=15,192(1+\frac{0.16}{1})^{1*2}=\ 20,442.36$

Part c) How much would you have at the end of 3 year?

in this problem we have

$t=3\ years\\ P=\ 15,192\\ r=0.16\\n=1$

substitute in the formula above

$A=15,192(1+\frac{0.16}{1})^{1*3}=\ 23,713.13$

Part d) How much would you have at the end of 4 year?

in this problem we have

$t=4\ years\\ P=\ 15,192\\ r=0.16\\n=1$

substitute in the formula above

$A=15,192(1+\frac{0.16}{1})^{1*4}=\ 27,507.23$