Question

If 2500 dollars is invested in an account for 10 years. Find the value of the investment at the end of

10 years if the interest is:
(a) 3.8% compounded annually: $
(b) 3.8% compounded semiannually: $
(a) 3.8% compounded quarterly: $
(b) 3.8% compounded monthly: $
(a) 3.8% compounded daily (ignore leap years): $
Round answers to the nearest cent.
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Answer 1

(a) 3.8% compounded annually: $3,630.06

(b) 3.8% compounded semiannually: $3,642.70

(a) 3.8% compounded quarterly: $3,649.16

(b) 3.8% compounded monthly: $3,653.52

(a) 3.8% compounded daily (ignore leap years): $3,655.64

Explanation:

Use Formula:

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

where A = accrued amount

P = principal (2,500)

r = interest rate /100 = 0.038

n = number of years = 10

t = number of times compounded
1 for annual
2 for semi-annual

4 for quarterly

12 for monthly

365 for daily