Answer:
(a) $63431.19
(b) $63620.20
(c) $63782.93
(d) $63814.97
Step-by-step explanation:
You want the value after 5 years of $49700 invested at 5% with various compounding intervals: annual, semiannual, monthly, daily.
Compound interest
The value of an investment P at interest rate r compounded n times per year for t years is given by ...
[tex]A=P\left(1+\dfrac{r}{n}\right)^{nt}[/tex]
Here, we have P=49700, r=0.05, t=5, and values of n that are 1, 2, 12, and 365.
Putting these values into the formula gives investment values of ...
(a) n = 1, A = 49700·(1+.05)^5 = 63431.19
(b) n = 2, A = 49700·(1 +.05/2)^10 = 63620.20
(c) n = 12, A = 49700·(1 +.05/12)^60 = 63782.93
(d) n = 365, A = 49700·(1 +.05/365)^1825 = 63814.97
The value for Annual compounding is $63,431.19.
The value for Semiannual compounding is $63,620.20.
The value for Monthly compounding is $63,782.93.
The value for Daily compounding is $63814.97.
