Question

154. How much money must be invested in an account that pays 6% per year in- terest to be worth $20,000 at the end of 8 years if (forgetting leap years and making "convenient" assumptions): a. Interest is compounded annually? onomani a b. Interest is compounded semi-annually? c. Interest is compounded quarterly? Wo b d. Interest is compounded monthly? no wo o e. Interest is compounded weekly? f. Interest is compounded daily? g. Interest is compounded hourly? h. Interest is compounded minutely? i. Interest is compounded secondly? M O D

Answer 1

Formula To find compound Interest

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

	=	final amount
	=	initial principal balance
	=	interest rate
	=	number of times interest applied per time period
	=	number of time periods elapsed

Formula can be modified to find principal amount

P= A/(1+r/n)nt

a)

P=20,000/(1+0.06/1)1*

=12,548.25

b)

P = 20,000/(1+0.06/2)2*8

=12,463.34

c)

P=20,000/(1 +0.06/4)***

=12419.86

d)

P = 20,000/(1+0.06/12) 12+8

=12,390.48

e)

P = 20,000/(1+0.06/52)52+

=12,379.09

f)$P=20,000/(1+0.06/365)^{365*8}$

=12376.16

g)

P = 20,000/(1+0.06/(365 * 24) 24-365*8

=12375.69

h)

P= 20,000/(1+0.06/(365 * 24 * 60))6024-365+8

=12375.66

i) its instant so you can use formula

P=20,000/et

=12375.65

It almost becomes after calculating for minutes