Suppose an investor deposits $19,000 into a savings account for 7 years at 9% in
ID: 3016134 • Letter: S
Question
Suppose an investor deposits $19,000 into a savings account for 7 years at 9% interest Find the total amount of money in the account if the interest is: Compounded annually, then the investment is worth $18, 017.53 after 7 years. Compounded quarterly, then the investment is worth after 7 years. Compounded monthly, then the investment is worth after 7 years. Compounded weekly, then the investment is worth after 7 years. Compounded daily, then the investment is worth after years 7. Round your answers to the nearest cent. Use a dollar sign to indicate that your answer is a monetary value.Explanation / Answer
Solution:
Given that
Principal value PV= $ 19000
Rate of interest = 9% = 0.09
time t= 7 year
We can investment worth = PV (1+r/n)nt
= 19000 ( 1+0.09/n)7n
Here n is varying according to situations
Case1 when compunded annually n = 1
Investment worth = 19000 ( 1+0.09)7 = $34,732.74
Case 2:
when compunded quaterly n = 4
Investment worth = 19000 ( 1+0.09/4)7*4 = $35,426.35
Case 3:
when compunded montly n = 12
Investment worth = 19000 ( 1+0.09/12)7*12 = $35,590.84
Case4:
when compunded weekly n = 52 ( let number of week in year )
Investment worth = 19000 ( 1+0.09/52)7*52 = $35,655.18
Case5:
when compunded daily n = 365 ( Let number of day in year )
Investment worth = 19000 ( 1+0.09/365)7*365 = $35,671.83