1) Use the compound interest formula to compute the total amount accumulated and the interest earned.
7000 for 4
4 years at 5.5
5.5% compounded monthly
The total amount accumulated after 4
4 years is ___
2) Use the present value formula to determine the amount to be invested now, or the present value needed.
The desired accumulated amount is $120 comma 000
120,000 after 4
4 years invested in an account with 4
4% interest compounded quarterly
The amount to be invested now, or the present value needed, is $ ____
3) To help pay for a class trip at the end of their senior year, the freshman
freshman class at a high school invests $1400
1400 from fund-raisers in a 42
42-month CD paying 4.6
4.6% interest compounded monthly
monthly. Determine the amount the class will receive when it cashes in the CD after 42
freshman class will receive $ ____ when it cashes in the CD.
4) A recent high school graduate received $600
600 in gifts of cash from friends and relatives. In addition, she
she received three scholarships in the amounts of $150
200, and $1400
1400. If she
she takes all her
her gift and scholarship money and invests it in a 24
24-month CD paying 3
3% interest compounded daily, how much will the graduate have when she
she cashes in the CD at the end of the 24
The graduate will have $____when she cashes in the CD.
(1) A = P(1 + r/n) nt = 7000*(1 + 0.055/12) 48 = 8718.15 (2) A=P(1+r/4)^4