anonymous
  • anonymous
Need help with completing the table below with the amounts you would have if you invested $1,000 for at 5% interest with simple interest and with interest compounded annually. Round to the nearest cent. Compound Interest 1 year $1050 2 years $ 3 years $ 4 years $ 5 years $
AP Math
jamiebookeater
  • jamiebookeater
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anonymous
  • anonymous
I know that for the first year it's $1050
anonymous
  • anonymous
Well, the formula for this is Interest = Price * rate * time. So, I is what we need to find. So, I = (1,000) (0.05) (1) is 50. So, for year 1, it is 1,050. Using the same formula, can you figure out the rest?
anonymous
  • anonymous
$1100 for year two?

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anonymous
  • anonymous
Yes. Good Job!
anonymous
  • anonymous
And then $1150
anonymous
  • anonymous
Yes. Just keep using that formula and you should get the rest.
anonymous
  • anonymous
wait but wouldn't this be it for simple interest? We are looking for compound?
anonymous
  • anonymous
hmm.
anonymous
  • anonymous
Well, for compound interest, Amount = Principal * (1 + rate / number of times per year) ^time
anonymous
  • anonymous
You see because I have the values we are getting for the simple interest table, and it's saying I got those values correct. But what I'm trying to do is complete the second column which is titled compound interest values.
anonymous
  • anonymous
That's what I did before but it said my values were incorrect, Can I show you what I did?
anonymous
  • anonymous
Sure.
anonymous
  • anonymous
Ok, so for the first year I did 1000(1+.05/1)^1
anonymous
  • anonymous
I got the fist value which is correct 1050
anonymous
  • anonymous
But for the remaining years here's what I did: 1000(1+.05/2)^2
anonymous
  • anonymous
But I'm assuming my substitution is wrong
anonymous
  • anonymous
Do you happen to see what I'm doing wrong?
anonymous
  • anonymous
are you sure you typed it in right?
anonymous
  • anonymous
Oh! Perhaps you did not do the order of operations. See, do the (1 + 0.05/2) first, then the ^2, and then the 1,000? When doing that I got, 1,050.625.
anonymous
  • anonymous
That's what I got too
anonymous
  • anonymous
It said my answers were wrong. Do you think it could be the rounding to the nearest cent?
anonymous
  • anonymous
I put in 1050.62
anonymous
  • anonymous
Perhaps so. Then it would be 1,050.625 = 1,050.63
anonymous
  • anonymous
That's what I had originally put but it said I'm wrong
anonymous
  • anonymous
Maybe I'll try emailing my instructor
anonymous
  • anonymous
Oh wait. you said you put in 1,050.62. When you round up its .63 not 2?
anonymous
  • anonymous
Ok and for the next years would these be correct then? $1050.84 $1050.94 $1051.10
anonymous
  • anonymous
They all came out to being wrong when I originally put them in
anonymous
  • anonymous
For year 3, I got 1,033.61...? Double checked it as well.
anonymous
  • anonymous
See if you get that.
anonymous
  • anonymous
I'm not getting that, I must be putting it in wrong
anonymous
  • anonymous
Are both year 4 & 5 wrong as well?
anonymous
  • anonymous
OH. DANGIT. SORRY that's me.
anonymous
  • anonymous
I forgot to change the exponent to 3. So, yes. 1,050.83 is correct =).
anonymous
  • anonymous
Do you mean for year three?
anonymous
  • anonymous
yes.
anonymous
  • anonymous
Because then wouldn't the values just be decreasing and then increasing?
anonymous
  • anonymous
From 1033.61 for year 2 to year 3
anonymous
  • anonymous
I guess thats what it is?
anonymous
  • anonymous
So do the rest of the values for year 4&5 seem correct?
anonymous
  • anonymous
um year 3 is 1,050.83, Year 4 is 1,050.94, and year 5 is 1,051.01. So yes.
anonymous
  • anonymous
it's still incorrect when I put it in, but thank you!
anonymous
  • anonymous
I'll email my instructor and figure it out
anonymous
  • anonymous
Your Welcome! Msg me if you need help again! =)

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