Invest $23,000 in a savings account at 4.25% interest compounded quarterly.
Invest into an ordinary annuity where $5,000 is deposited each year into an account that earns 6.6% interest compounded annually.
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3% compounded interest daily on one million dollars is how much monthly
To determine the future value of an investment, we can use the compound interest formula. The formula for compound interest is:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (the initial investment)
r = the annual interest rate (expressed as a decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested for
For the first investment:
P = $23,000
r = 4.25% = 0.0425 (expressed as a decimal)
n = 4 (compounded quarterly)
t = not specified, let's assume the investment is made for 5 years
Using these values, we can calculate the future value of the investment:
A = 23,000(1 + 0.0425/4)^(4*5)
A ≈ $27,174.97
Therefore, after 5 years, the investment of $23,000 in the savings account at 4.25% interest compounded quarterly will grow to approximately $27,174.97.
For the second investment:
P = $5,000 (annually deposited)
r = 6.6% = 0.066 (expressed as a decimal)
n = 1 (compounded annually)
t = not specified, let's assume deposits are made for 10 years
Since this is an annuity, we need to calculate the future value of each annual deposit separately and then sum them up. We can use the future value of an ordinary annuity formula:
A = P * [(1 + r)^t - 1] / r
Using these values, we can calculate the future value of the annuity:
A = 5,000 * [(1 + 0.066)^10 - 1] / 0.066
A ≈ $66,512.32
Therefore, after 10 years, the investment of $5,000 annually in the account that earns 6.6% interest compounded annually will have a future value of approximately $66,512.32.