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Math Help - compound interest

  1. #1
    Senior Member euclid2's Avatar
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    compound interest

    Calculate the amount for each section using compound interest.
    A) $1000 invested at 3%/a compounded semiannually for 8 years
    B) $5500 invested at 6%/a compounded monthly for 42 months
    C) $1000 borrowed at 5%/a compounded quarterly for 5.5 years
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  2. #2
    A riddle wrapped in an enigma
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    Quote Originally Posted by euclid2 View Post
    Calculate the amount for each section using compound interest.
    A) $1000 invested at 3%/a compounded semiannually for 8 years
    B) $5500 invested at 6%/a compounded monthly for 42 months
    C) $1000 borrowed at 5%/a compounded quarterly for 5.5 years
    Study this. Then apply it to your set of problems.


    Compound Interest Formula



    A=P\left(1+\frac{r}{n}\right)^{nt}




    P = principal amount (the initial amount you borrow or deposit)
    r = annual rate of interest (as a decimal)
    t = number of years the amount is deposited or borrowed for.
    A = amount of money accumulated after n years, including interest.
    n = number of times the interest is compounded per year



    Example:
    An amount of $1,500.00 is deposited in a bank paying an annual interest rate of 4.3%, compounded quarterly. What is the balance after 6 years?

    Solution:
    Using the compound interest formula, we have that
    P = 1500, r = 4.3/100 = 0.043, n = 4, t = 6. Therefore,
    So, the balance after 6 years is approximately $1,938.84.
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