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jenni_fowler

find the amount of money in the bank account given the following conditions: initial deposit= $5000, annual rate= 3%, time= 2 years

  • 2 years ago
  • 2 years ago

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  1. adnanchowdhury
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    http://d.pr/IASx

    • 2 years ago
  2. adnanchowdhury
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    a = initial deposit, r = 1.03, n = 2

    • 2 years ago
  3. waheguru
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    What grade?

    • 2 years ago
  4. jenni_fowler
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    11th

    • 2 years ago
  5. jenni_fowler
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    says answer is ‎5,304.50

    • 2 years ago
  6. GT
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    It should be 5000 * (1.03)^2. Assuming compounding of the interest rate.

    • 2 years ago
  7. jenni_fowler
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    oh so its 5000(1.03)^2

    • 2 years ago
  8. waheguru
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    Gt where dide u get the 1.3 from

    • 2 years ago
  9. GT
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    At the end of first year, you will have: 5000 + 5000 * 0.03 = 5000 * (1.03). At the end of second year, you will have: 5000 * (1.03) + 5000 * (1.03) * (0.03) Because you earn interest in the second year on the interest amount of the first year. So, that is same as: 5000 * (1.03)^2. In general, for compounded interest, for n years at rate r and principal p, you get: p * (1+r)^n

    • 2 years ago
  10. fortheloveofscience
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    oh yeah compounding of interest... didnt tought of that

    • 2 years ago
  11. waheguru
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    OH

    • 2 years ago
  12. waheguru
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    I GET IT NOW GT TANKS

    • 2 years ago
  13. jenni_fowler
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    so how do i get the answer

    • 2 years ago
  14. GT
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    Use a calculator to find: 5000 * (1.03) * (1.03). That should give you: 5,304.50

    • 2 years ago
  15. fortheloveofscience
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    yup its correct sir

    • 2 years ago
  16. jenni_fowler
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    thanks it swas 5304.5

    • 2 years ago
  17. GT
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    Sometimes, these kind of problems can be formulated such that the interest rate "r" is compounded semi-annually or something else. In that case, the "formula" will be similar, but in that case, in p*(1+r)^n, r represents the rate of interest for that period (semi-annually for example) and n represents the total "compounding" periods.

    • 2 years ago
  18. fortheloveofscience
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    well we all stupidly used simple interest formula..silly me

    • 2 years ago
  19. jenni_fowler
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    so what is the p r and n represent in the equation

    • 2 years ago
  20. GT
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    For example, in this exact same problem, if compounding happened semi-annually, then you will have the following at the end of two years: 5000 * (1+0.015)^4

    • 2 years ago
  21. GT
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    p is initial amount. n is number of periods.

    • 2 years ago
  22. GT
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    r is rate of interest for that period.

    • 2 years ago
  23. fortheloveofscience
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    principle,rate of interest and time period

    • 2 years ago
  24. jenni_fowler
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    so if it were 3000 instead of 5000 and rate was 5.5 and time was 5 years how do i set that up

    • 2 years ago
  25. GT
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    3000 * (1.055)^5

    • 2 years ago
  26. fortheloveofscience
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    use the same algorithm

    • 2 years ago
  27. GT
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    assuming annual compounding.

    • 2 years ago
  28. jenni_fowler
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    ok so its similar to the other one

    • 2 years ago
  29. GT
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    correct.

    • 2 years ago
  30. jenni_fowler
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    i got 3920.88

    • 2 years ago
  31. jenni_fowler
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    rounded

    • 2 years ago
  32. GT
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    Sounds right.

    • 2 years ago
  33. jenni_fowler
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    did i do it right?

    • 2 years ago
  34. GT
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    Yeah, I got the same. :)

    • 2 years ago
  35. fortheloveofscience
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    hmm i guess so..

    • 2 years ago
  36. adnanchowdhury
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    Oh sorry. My mistake. I gave you the sum formula for geometric progression. The correct formula in this case is: \[a _{n} = ar ^{n-1}\], but in this case, you would take it as \[a _{n} = ar ^{n}\]

    • 2 years ago
  37. jenni_fowler
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    so i did it right :D

    • 2 years ago
  38. GT
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    yes!!

    • 2 years ago
  39. jenni_fowler
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    thakns again everyone

    • 2 years ago
  40. fortheloveofscience
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    say that to GT

    • 2 years ago
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