Quinn and Julius inherited $50,000 each from their great-grandmother’s estate. Quinn invested her money in a 5-year CD paying 1.6% interest compounded semiannually. Julius deposited his money in a money market account paying 1.05% compounded monthly. How much total money will Quinn have after 5 years?
How much total money will Julius have after 5 years?
P = Po(1+r)^n.
Po = 50000
r = (1.6%/2)/100% = 0.008 = Semi-APR.
n = 2comp./yr. * 5yrs = 5yrs = 10 Compounding periods.
Plug the above values into the given Eq and solve for P.
Graph the supply and demand schedule for good A using P5 through P15 as the value of P
To calculate the total amount of money Quinn will have after 5 years, we need to use the compound interest formula:
A = P(1 + r/n)^(nt)
where:
A is the ending amount of money
P is the principal amount (initial investment)
r is the annual interest rate (in decimal form)
n is the number of times the interest is compounded per year
t is the number of years
For Quinn:
P = $50,000 (principal amount)
r = 1.6% = 0.016 (annual interest rate in decimal form)
n = 2 (compounded semiannually)
t = 5 (number of years)
Calculate A for Quinn:
A = $50,000 * (1 + 0.016/2)^(2*5)
A = $50,000 * (1.008)^10
A ≈ $52,040.13
So, Quinn will have approximately $52,040.13 after 5 years.
To calculate the total amount of money Julius will have after 5 years, we use the same formula but with different values:
For Julius:
P = $50,000 (principal amount)
r = 1.05% = 0.0105 (annual interest rate in decimal form)
n = 12 (compounded monthly)
t = 5 (number of years)
Calculate A for Julius:
A = $50,000 * (1 + 0.0105/12)^(12*5)
A = $50,000 * (1.000875)^60
A ≈ $52,601.53
So, Julius will have approximately $52,601.53 after 5 years.