clhenry 2 years ago Find the value of $10000 at the end of one year if it is invested in an account that has an interest rate of 4.95% and is compounded in accordance with the rules below. (a). compounded monthly (b). compounded daily (assuming a 365- day year) (c). compounded quarterly • This Question is Closed 1. PhoenixFire Do you know the compound interest formula? 2. PhoenixFire $F=P(1+{r \over n})^{nt}$F=Future amount P=Initial amount r=annual interest rate n=number of times compounded in a year t=number of years. So, for (a), compounded monthly. n=12, t=1, P=10000, r=0.0495. Substitute all that in and you'll have your F, the future amount. 3. clhenry Actually they are giving me the formula A=P(1+r/m)mt 4. clhenry $10000(1+0.0495\div12)12$ 5. PhoenixFire Same thing, different letters. 6. clhenry ok. SO HOW CAN I FIND THE ANSWER BECAUSE WHAT IM GETTING DOESNT SEEM CORRECT TO WHAT THE EXAMPLE IS SHOWING ME 7. clhenry I pretty much have found the computing formula to find each steps but unable to get verifiable answer 8. clhenry because in the examples they use 15000 and the answer turns out to be$15696.91

9. PhoenixFire

$A=P(1+{r \over m})^{mt}$$A=10000(1+{0.0495\over 12})^{12}$$A=10000(1.05)$$A=10506.4$ Obviously I've done rounding where I shouldn't have, but that's the procedure.

10. clhenry

how did they get that answers from using the formula because i know for m- i would put 12

11. PhoenixFire

What are the values they use in the examples?

12. clhenry

they used 15000-p, 0.0455- r, and 12- m

13. PhoenixFire

Right so, put those values in in the formula. $A=15000(1+{0.0455\over 12})^{12}$

14. clhenry

yes

15. PhoenixFire

And you get: 15696.91

16. clhenry

yes thats what they got

17. clhenry

how did u reach to that?

18. PhoenixFire

By working out the above equation. Lets do it step by step... Upcoming Ugly numbers!!! 0.0455/12=0.00379166666666666666666666666667 That+1=1.00379166666666666666666666666667 that ^ 12=1.0464609601126369220378253015612 that * 15000=15696.914401689553830567379523418 with some rounding, you get 15696.91.

19. clhenry

thank you

20. clhenry

let me try it myself and i will let you know

21. PhoenixFire

Order of operations. Brackets Exponents Division Multiplication Addition Subtraction or easily remembering: BEDMAS. Also, remember ab^k is NOT equal (ab)^k. the difference is that ab^k is a*(b^k) whereas (ab)^k is (a*b) ^ k... there's a different order that you apply the maths in; which result in a different value at the end.

22. clhenry

ok

23. PhoenixFire

Good luck.

24. clhenry

it didnt work the way u did it when i plugged everything myself into the equation It give me 10,506.39 and i got 2690666.1

25. PhoenixFire

Work it out in steps. 0.0495/12=a 1+a=b b^12=c P*c=F