Using a term of 50 years in all cases, calculate the account balance in each case to
see which variable has the most impact on the amount.
You should use your calculator for these calculations. A=P(1+r/n)^50_n
Increase Principal (P)
Principal Interest-P = $1,000.00 rate- r = 1% Compound Frequency n = 4 what is the Account Balance? A =? P = $2,000.00 Rate- r = 1% Compound Frequency n = 4 what is the Account Balance? A =?
P = $3,000.00 Rate-r = 1% Compound Frequency n = 4 what is the Account Balance? A =?
For each case, we will substitute the given values into the formula A = P(1+r/n)^(50*n).
Case 1: Increase Principal (P)
P = $1,000.00
r = 1% = 0.01
n = 4
A = $1,000(1+0.01/4)^(50*4)
Calculating this using a calculator, we find that the account balance is approximately $1,644.02.
Case 2:
P = $2,000.00
r = 1% = 0.01
n = 4
A = $2,000(1+0.01/4)^(50*4)
Calculating this using a calculator, we find that the account balance is approximately $3,288.03.
Case 3:
P = $3,000.00
r = 1% = 0.01
n = 4
A = $3,000(1+0.01/4)^(50*4)
Calculating this using a calculator, we find that the account balance is approximately $4,932.05.
In each case, as the principal amount (P) increases, the account balance also increases. This shows that the principal has the most impact on the amount.
Using a term of 50 years in all cases, calculate the account balance in each case to
see which variable has the most impact on the amount.
You should use your calculator for these calculations. A=P(1+r/n)^50_n
Increase Rate (r)
Principal -P = $1,000.00 rate- r = 1% Compound Frequency n = 4 what is the Account Balance? A =? P = $1,000.00 Rate- r = 2% Compound Frequency n = 4 what is the Account Balance? A =?
P = $1,000.00 Rate-r = 3% Compound Frequency n = 4 what is the Account Balance? A =?
Increase Compound Frequency (n)
Principal -P = $1,000.00 rate- r = 1% Compound Frequency n = 4 what is the Account Balance? A =? P = $1,000.00 Rate- r = 1% Compound Frequency n = 12 what is the Account Balance? A =?
P = $1,000.00 Rate-r = 1% Compound Frequency n = 365 what is the Account Balance? A =?
Case 1: Increase Rate (r)
P = $1,000.00
r = 1% = 0.01
n = 4
A = $1,000(1+0.01/4)^(50*4)
Calculating this using a calculator, we find that the account balance is approximately $1,644.02.
Case 2:
P = $1,000.00
r = 2% = 0.02
n = 4
A = $1,000(1+0.02/4)^(50*4)
Calculating this using a calculator, we find that the account balance is approximately $2,208.04.
Case 3:
P = $1,000.00
r = 3% = 0.03
n = 4
A = $1,000(1+0.03/4)^(50*4)
Calculating this using a calculator, we find that the account balance is approximately $2,793.46.
In each case, as the interest rate (r) increases, the account balance also increases. This shows that the interest rate has the most impact on the amount.
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Case 1: Increase Compound Frequency (n)
P = $1,000.00
r = 1% = 0.01
n = 4
A = $1,000(1+0.01/4)^(50*4)
Calculating this using a calculator, we find that the account balance is approximately $1,644.02.
Case 2:
P = $1,000.00
r = 1% = 0.01
n = 12
A = $1,000(1+0.01/12)^(50*12)
Calculating this using a calculator, we find that the account balance is approximately $1,644.14.
Case 3:
P = $1,000.00
r = 1% = 0.01
n = 365
A = $1,000(1+0.01/365)^(50*365)
Calculating this using a calculator, we find that the account balance is approximately $1,646.58.
In each case, as the compound frequency (n) increases, the account balance also increases. However, the impact on the amount is not as significant as the impact of the interest rate (r).