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tab es caps shift fn trition c Funct ir Kole Sy Ne Lab 10.2-Exponential Financial Models Financial Applications 1. Let's say you put $100 into
tab es caps shift fn trition c Funct ir Kole Sy Ne Lab 10.2-Exponential Financial Models Financial Applications 1. Let's say you put $100 into a savings account that earns 5% annual interest compounded annually. a) How much interest would you earn in the first year? 2 c) Use the table to repeat the process five times. How much is in the account after five years? amount from last year + interest from this year Year 1 End of year $105 100+ 100(. 05) = 100(1 + .05) 105(1 +.05) = 100(1+.05)(1+.05) 3 4 MacBook Air 5 b) Now add that amount to your principal. How much interest would you earn on this new amount in the second year? d) How much (A) would be in the account after t years? A = b) What about semi-annually? 2. The formula you have derived works if you compound the interest once per year (annually). Now what would you have to do with this formula if the same interest rate was: a) Compounded monthly? (Hint: You need to change the annual rate to a monthly rate and change the time to the number of months.) Use
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