Find the amount in the account after 5 years if the account is compounded semiannually, quarterly, and monthly.
your equation is:
f = p * (1 + (i/c))^(n*c)
f = future value
p = present value
i = annual interest rate
c = number of compound intervals per year
n = number of years.
your principal is 7000.
your annual interest rate is 7%
you want to find the amount in the account after 5 years.
money is compounded semi-annually, quarterly, and monthly.
money is compounded semi-annually:
p = 7000
i = .07 (annual interest rate percent divided by 100%).
n = 5
c = 2
i/c = .07/2 = .035
n*c = 5*2 = 10
formula becomes:
f = 7000 * (1.035)^10 = 9874.19
money is compounded quarterly:
p = 7000
i = .07 (annual interest rate percent divided by 100%).
n = 5
c = 4
i/c = .05/4 =
0.0125
n*c = 5*4 = 20
formula becomes:
f = 7000 * (1.0125)^20 = 8974.26
money is compounded monthly:
p = 7000
i = .07 (annual interest rate percent divided by 100%).
n = 5
c = 12
i/c = .07/12 =
0.005
n*c = 5*12 = 60
formula becomes:
f = 7000 * (1.005)^60 = 9441.95
(a) The amount in the account after 5 years if the account is compounded semiannually is? (Round to the nearest cent.)
money is compounded semi-annually:
p = 7000
i = .07 (annual interest rate percent divided by 100%).
n = 5
c = 2
i/c = .07/2 = .035
n*c = 5*2 = 10
formula becomes:
f = 7000 * (1.035)^10 = 9874.19
