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 quarterly.

1) Use the compound interest formula to compute the total amount accumulated and the interest earned.

​$7000

7000 for 4

4 years at 5.5

5.5​% compounded monthly

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

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

42 months.

The freshman

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

150​, ​$200

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

24​-months?

The graduate will have ​$____when she cashes in the CD.

.

Top Answer

(1) A = P(1 + r/n) nt = 7000*(1 + 0.055/12) 48 = 8718.15 (2) A=P(1+r/4)^4

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