Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. Interest may be calculated more often than once per year. The process is the same, and the interest rate r is still expressed as

image text in transcribed
image text in transcribed
4. Interest may be calculated more often than once per year. The process is the same, and the interest rate r is still expressed as an annual interest rate, but you will only receive a portion of annual interest each time period. For example, if we invest $1800 at an annual interest rate of 2.40% compounded quarterly, how much will our investment be worth after two years? Below is a chart. Note that in the interest calculation for the first quarter of the year, we do not receive (1800)(0.024)=43.20. Fhstead, we receive one quarter of that amount since the annual interest needs to be divided into four payments. However, after the first quarter, we will be earning interest on the interest, so that after one year, we will have earned more than $43.20 in interest. The interest for the first quarter should be (1800)(0.024)(41)=10.80. Write an expression for the value of the investment A after two years, beginning with an initial value of P, invested at an interest rate of r, compounded n=4 times per year. 4. Interest may be calculated more often than once per year. The process is the same, and the interest rate r is still expressed as an annual interest rate, but you will only receive a portion of annual interest each time period. For example, if we invest $1800 at an annual interest rate of 2.40% compounded quarterly, how much will our investment be worth after two years? Below is a chart. Note that in the interest calculation for the first quarter of the year, we do not receive (1800)(0.024)=43.20. Fhstead, we receive one quarter of that amount since the annual interest needs to be divided into four payments. However, after the first quarter, we will be earning interest on the interest, so that after one year, we will have earned more than $43.20 in interest. The interest for the first quarter should be (1800)(0.024)(41)=10.80. Write an expression for the value of the investment A after two years, beginning with an initial value of P, invested at an interest rate of r, compounded n=4 times per year

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Your Money The Missing Manual

Authors: J.D. Roth

1st Edition

0596809409, 978-0596809409

More Books

Students also viewed these Finance questions

Question

What are the stages of project management? Write it in items.

Answered: 1 week ago