Sign up for FREE

Alg462 Compound/Continuous Interest

Last updated almost 5 years ago

11 questions

1

1

1

1

1

1

1

1

1

1

1

Question 1

1.

You deposit $2200 in a bank account that pays 3% annual interest compounded quarterly. Find the balance after 4 years.

You must show your work in the "show your work" box.

Question 2

2.

You deposit $2200 in a bank account that pays 3% annual interest compounded monthly. Find the balance after 4 years.

You must show your work in the "show your work" box.

Question 3

3.

You deposit $2200 in a bank account that pays 3% annual interest compounded daily. Find the balance after 4 years.

You must show your work in the "show your work" box.

Question 4

4.

Looking at the three situations in questions #1-3, which account pays you the most interest?

Compounded quarterly (#1)

Compounded monthly (#2)

Compounded daily (#3)

Question 5

5.

You want to save $3000 in your savings account after 3 years of collecting interest. If the account pays 3.5% interest compounded monthly, find the amount you should deposit in the account to reach $3000 at the end of 3 years.

You must show your work in the "show your work" box.

Question 6

6.

You want to save $3000 in your savings account after 3 years of collecting interest. If the account pays 4% interest compounded yearly, find the amount you should deposit in the account to reach $3000 at the end of 3 years.

You must show your work in the "show your work" box.

Question 7

7.

Is investing $3000 at 6% annual interest compounded monthly and $3000 at 8% annual interest compounded monthly equivalent to investing $6000 (the total of the two principals) at 7% interest (the average of the two interest rates) compounded monthly?

You should use the formula three times! Show your work and explain your answer in the show your work box.
No work = No credit!

Yes, they are the same

No, they are not equivalent --> the two accounts are more than the one account

No, they are not equivalent --> the two accounts are less than the one account

Question 8

8.

You deposit $2000 in an account that pays 4% annual interest compounded continuously. What is the balance after 5 years?

You must show your work in the "show your work" box.

Question 9

9.

You have $1099.50 in an account that paid 2.65% annual interest compounded continuously for twelve years. How much was the initial deposit?

You must show your work in the "show your work" box.

Question 10

10.

Question 11

11.

Suppose you have $5500 to deposit into a bank account. Which of the options below would be the best for you to have the greatest amount after 7 years?
--> The account pays 3.5% interest compounded monthly
OR
--> The account pays 3.495% interest compounded continuously

You must show your work in the "show your work" box.

3.5% compounded monthly

3.495% compounded continuously