Wednesday

January 28, 2015

January 28, 2015

Posted by **Steph** on Saturday, January 24, 2009 at 7:37pm.

- College level math -
**Damon**, Saturday, January 24, 2009 at 7:41pm4*12 = 48 periods

100 * 1.005^48

100 * 1.270489

$127.05

- College level math -
**tchrwill**, Sunday, January 25, 2009 at 10:50amWith compound interest, the interest due and paid at the end of the interest compounding period is added to the initial starting principal to form a new principal, and this new principal becomes the amount on which the interest for the next interest period is based. The original principal is said to be compounded, and the difference between the the final total, the compound amount, accumulated at the end of the specified interest periods, and the original amount, is called the compound interest.

In its most basic use, if P is an amount deposited into an account paying a periodic interest, then Sn is the final compounded amount accumulated where

..........................Sn = P(1+i)^n

where i is the periodic interest rate in decimal form = %Int./(100m), n is the number of interest bearing periods, and m is the number of interest paying periods per year.

For example, the compound amount and the compound interest on $5000.00 resulting from the accumulation of interest at 6% annual interest compounded monthly for 10 years is as follows:

Since m = 12, i = .06/12 = .005. Since we are dealing with a total of 10 years with 12 interest periods per year, n = 10 x 12 = 120. From this we get

.........................Sn = $5000(1+.005)^120 = $5000(1.8194) = $9097.

Consequently, the compound interest realized is $9097 - $5000 = $4097. Of course the compound interest rate can be calculated directly from the simple expression

.............I = P[(1+i)^n - 1].

**Answer this Question**

**Related Questions**

Math - Suppose you deposit $400 in an account that earns 0.75 percent each ...

Math - Suppose you deposit $400 in an account that earn 0.75 percent each ...

Math - Please help me to solve it, today is mydue day ! Suppose an individual ...

algebra - 1. Suppose Mary deposits $200 at the end of each month for 30 years ...

Math - Suppose an individual makes an initial investment of $2400 in an account ...

math - you deposit $ 900 in a savings account that earns 4%interest coumpounded ...

math - Suppose an individual makes an initial investment of $1100 in an account ...

Engineering Econonmy - You decide to open an IRS-approved retirement account at ...

Finite Mathematics - Jessica wants to accumulate $14,000 by the end of 5 yr in a...

math - Samantha opened a savings account and deposited some money into the ...