Question

1. you invest $10,000 for 5 years at 4% interest. To the nearest cent, find the amount of money in the account after 5 years if:

a) The interest is simple interest.
b) The interest is Compound annually
c) The interest is Compound monthly
d) The interest is compound daily
2. After 20 years, the total amount in an investment earning 3.5% interest compounded quarterly was $16,061.05. To the nearest dollar, how much money was originally invested?
3. After 5 years, the total amount in an investment earning 4% interest compounded daily was $12,213.89. To the nearest dollar, how much money was originally invested?

Answer 1

See explanation

Explanation:

1.

a) simple interest = PRT/ 100

I = 10,000 * 4 * 5/100

I =$ 2000

A = $10,000 + $ 2000

A =$ 12,000

b) A = P(1 + r/n)^t*n

Where;

A = amount

P = principal

r = rate per year

n = number of time the interest is compounded in a year

t = time in years

A = 10,000(1 + 0.04)^5/1

A = $ 12,166.5

c) A = P(1 + r/n)^t*n

A = 10,000(1 + 0.04/12)^5*12

A =$ 12,210

d) A = P(1 + r/n)^t*n

A = 10,000(1 + 0.04/365)^5*365

A=$ 12,213.90

2.A = P(1 + r/n)^t*n

$16,061.05 = P( 1 + 0.035/4) ^20*4

$16,061.05 = P (2.0076)

P = $16,061.05/2.0076

P= $8000

3.

A = P(1 + r/n)^t*n

12,213.89 = P(1 + 0.04/365)^5*365

12,213.89 = P(1.221)

P = 12,213.89/1.221

P = $10,003.2