Question

Predict the expression that represents the total after

a) $100 is invested at 6% interest, compounded semi-annually, for 10 years.

b) $100 is invested at 6% interest, compounded semi-annually, for 15 years.

c) $100 is invested at 6% interest, compounded quarterly, for 1 year.

d) $100 is invested at 6% interest, compounded quarterly, for 20 years.

Enter the expressions into a calculator. Round answers to the nearest cent.

Answer 1

P = $100

R = 6%

a)

Compounded semi-annually for 10 years

so, R = 6/2 = 3%

N = 10 x 2 = 20

A = P(1+R/100)^N

= 100 (1 + 3/100)²⁰

= $180.61

b)

Compounded semi-annually for 15 years

so, R = 6/2 = 3%

N = 15 x 2 = 30

A = P(1+R/100)^N

= 100 (1 + 3/100)³⁰

= $242.72

c)

Compounded quarterly for 1 year

so, R = 6/4 = 1.5%

N = 1 x 4 = 4

A = P(1+R/100)^N

= 100 (1 + 1.5/100)⁴

= $106.14

d)

Compounded quarterly for 20 years

so, R = 6/4 = 1.5%

N = 20 x 4 = 80

A = P(1+R/100)^N

= 100 (1 + 1.5/100)⁸⁰

= $329.1