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If 7000 dollars is invested in a bank account at an interest rate of 7 per cent per year, Find the amount in the bank after 14 y

Harlamova29_29 [7]

Answer:

1. Interest compounded annually = $18,049.74

2. Interest compounded quarterly = $18,493.77

3. Interest compounded Monthly = $18,598.16

4. Interest compounded continuously = $18,651.19

Explanation:

First let me state the formula for compound interest:

The future value of a certain amount which is compounded is the total amount (Principal + interest) on the amount of money, after compound interests have been applied, and this is shown below:

FV = PV $(1+\frac{r}{n} )^{n*t}$

where:

FV = Future value

PV = Present value = $7,000

r = interest rate in decimal = 0.07

n = number of compounding periods per year

t = compounding period in years = 14

For interests compounded continuously, the Future value is given as:

FV = PV × $e^{r*t}$

where

$e$ is a mathematical constant which is = 2.7183

Now to calculate each on the compounding periods one after the other:

1. Interest compounded annually:

here n (number of compounding periods annually) = 1

Therefore,

FV = 7,000 × $(1+\frac{0.07}{1})^{14}$

FV = 7,000 × $1.07^{14}$ = $18,049.74

2. Interest compounded quarterly:

here, n = 3 ( there are 4 quarters in a year)

FV = 7,000 × $(1+\frac{0.07}{4} )^{4*14}$

FV = 7,000 × $1.0175^{56}$ = $18,493.77

3. Interest compounded Monthly:

here n = 12 ( 12 months in a year)

FV = 7,000 × $(1+\frac{0.07}{12} )^{12*14}$

FV = 7,000 × $1.005833^{168}$ = $18,598.16

4. Interests compounded continuously:

FV = PV × $e^{0.07 * 14}$

FV = 7,000 × 2.66446 = $18,651.19

3 0

2 years ago

Why is it important to manage your income? HELPPPPPP ASAPPPPPPP!!!!!

Free_Kalibri [48]

Knowing your income will help you create a budget that allows to pay for living expenses

5 0

3 years ago

When the "invisible hand" guides economic activity, prices of products reflect______________.

FinnZ [79.3K]

Answer:

b) both the values that society places on those products and the costs to society of producing those products

Explanation:

When the "invisible hand" guides economic activity, prices are known as equilibrium prices.

Equilibrium price is found where the demand curve intersects with the supply curve .

Equilibrium price is the price where both the value that society places on those products and the costs to society of producing those products are equal.

I hope my answer helps you

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3 years ago

There are several different ways that Bond’s Gym can solve its problem.

AysviL [449]

<span>The main problem at Bond's Gym is excess demand. This means that negative incentives are the best way to go. Positive incentives would only increase demand at the gym, making the problem worse. however, negative incentives would create a positive result for the owner, as he would make more money and expand his gym, allowing him to meet more consumer demands.</span>

5 0

2 years ago

Read 2 more answers

Dave has $100,000 to invest in 10 mutual fund alternatives with the following restrictions. For diversification, no more than $2

Over [174]

Answer:

Check the explanation

Explanation:

Let the binary variables be: x1,x2,x3.....x10. If x1=0, no amount is invested in fund 1 and if it is 1 it means that an amount is invested. Let y1,y2.....y 10 be the variables for the amount invested.

Kindly check the first attached image for the table.

The objective is to maximize the return. Hence our objective function is: 6.7%*y1+7.65%*y2+7.55%*y3+7.45%*y4+7.5%*y5+6.45%*y6+7.05%*y7+6.9%*y8+5.2%*y9+5.9%*y10. This has to be maximized.

Constraints:

(i) y1,y2.....y10<=25,000 (no more than $25,000 can be invested in any one fund)

(ii) If x1=1, y1>=10,000, 0. This what if formula will be applicable for all the variables. (If a fund is chosen for investment, then at least $10,000 will be invested in it).

(iii) x1+x2+x3+x4<=2 (No more than two of the funds can be pure growth funds)

(iv) y9+y10>=y1+y2+y3+y4 (at least as much as the amount invested in pure amount invested in pure bond funds must be at least as much as the amount invested in pure growth funds)

(v) all x's are binary and all y's>=0. (vi) y1+y2+y3+y4....y10 = 100,000 (amount to be invested)

Solving in excel using the solver function the following solution is obtained:

Kindly check the second attached image for the table.

Thus the maximum return = $7056.25

Amount invested in different funds are:

Kindly check the Third attached image for the table.

4 0

3 years ago