Question

You invest $5,500 into a 4.5% one-year CD. Find the balance of the account after five
years if it's compounded:
a. Quarterly Equation:______________________ Balance: $_________________
b. Annually Equation:______________________ Balance: $_________________
c. Continuously Equation :___________________ Balance: $_______________
Reiny
The only one you should have any difficulty with is the last one, the others are very
straightforward. You MUST know how to do these if you are studying this topic.

c. amount = 5500(e^(5*.045) = 5500(e^.225) = .... use your calculator
Henry
a. P = Po(1+r)^n.
Po = $5,500.
r = 0.045/4 = 0.01125 = Quarterly rate.
n = 4comp./yr. * 5yrs. = 20 Compounding periods.

b. P = Po(1+r)^n.
r = 0.045/yr.
n = 1Comp./yr * 5yrs. = 5 Compounding periods.