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
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: $_______________
2 answers
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.
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.
0 answers