Posted by **Randi** on Saturday, April 30, 2011 at 2:36am.

Mary B deposits $8500 into a savings account, compounded monthly at a nominal interest rate of 9 percent, as part of a savings plan that she would like to undertake in 5 years.

1) What is the effective interest rate per annum?

2) How much money would she have saved after 5 years?

3) Mary has an an emergency at the end of the second year after she had invested the money.She withdraws $5000 How much money would she receive after 5 years?

- Math -
**drwls**, Saturday, April 30, 2011 at 9:04am
1) The balance after one year with compounding is increased by a factor

(1 +(.09/12)^12 = (1.0075)^12 = 1.093807

The effective annual interest rate is therefore 9.3807%

2) 8500*(1.093807)^5 = $ 13,308.29

3) After two years and withdrawing $5000, she is left with

8500*(1.093807)^2 - 5000

= 10,169.52 - 5000 = 5169.52

After three more years, that becomes

5159.52*(1.093807)^3 = $ 6751.98

## Answer this Question

## Related Questions

- geometry - A person deposits $500.00 into a savings account and pays 5% annual ...
- Math - (a) Themba wants to deposit a sum of money into a savings account so that...
- math - If you deposit $10,000 in a savings account now, what interest rate ...
- annuities..math - Anne Thorne deposits $100 at the end of each month into her ...
- math - a person deposits five hundred dollars in a savings account that pays 5...
- math - If you put $ 6,000 in a savings account that pays interest at the rate of...
- Personal Finance - Mary just deposited $33,000 in an account paying 7% interest...
- math models - If $3800 is invested in a savings account for which interest is ...
- Math - I need to see how this is answered. 1. Lauren deposited $200 into her ...
- Math - If business manager deposits $30,000 in a savings account at the end of ...