Question

Find the value of $15,000 at the end of one year if it is invested in...

Find the value of $15,000 at the end of one year if it is invested in an account that has an interest rate of 4.50% and is compounded in accordance with the rules below. a. compounded monthly b. compounded daily? (assuming a? 365-day year) c. compounded quarterly

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Answer #1

Ans:,

Given,

Present Value (PV) = $15,000

Interest Rate (r) = 4.5 %

Future Value = Present Value (1 + r )n

a) Compounded Monthly -

r = 0.375 % Monthly

n = 12 Months

= 15,000 (1 + 0.00375)12

= 15,000 * 1.04593983

= $ 15,689.10

b)Compounded Daily -

r = 0.012329 % Daily

n = 365 Days

= 15,000 (1 + 0.00012329)365

= 15,000 * 1.04602585

= $ 15,690.39

c) Compounded Quarterly -

r = 1.125 % Quarterly

n = 4 Quarters

= 15,000 (1 + 0.01125)4

= 15,000 * 1.04576509

= $ 15,686.48

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