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I dont understand this and I need help (Image Attached) ​

I dont understand this and I need help (Image Attached) ​-example-1
User NewbiZ
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1 Answer

9 votes

9514 1404 393

Answer:

  1. $3050.48
  2. $3005.25
  3. total: $6055.73

Explanation:

You are given enough information to be able to fill in the values in the compound interest formula:

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

where P is the principal invested (2500), r is the annual interest rate, n is the number of times per year interest is compounded, and t is the number of years (5).

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For the first investment, r = .04 and n = 4. ("Quarterly" means interest is compounded 4 times per year.) The account balance after 5 years is then ...

A = 2500·(1 +.04/4)^(4·5) = 2500·1.01^20 ≈ 3050.48

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For the second investment, r = .0375 and n = 1. ("Annually" means interest is compounded 1 time per year.) The account balance after 5 years is then ...

A = 2500·(1 +.0375/1)^(1·5) = 2500·1.0375^5 ≈ 3005.25

__

After 5 years, the first investment is worth $3050.48; the second investment is worth $3005.25. Together, their value is $6055.73.

User ImGroot
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