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?
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Initial amount=$50000 rate=0.016 Number of years=5 Amount after 5 years compounded semiannually= 50000(1+0.016/2)^5*2 =50000(1.08)^10 [ =50000*2.16 =108000 Amount after 5 years compounded semiannually=$108000
Julius deposited his money in a money market account paying 1.05% compounded monthly. How much total money will Juliushave after 5 years?
To calculate the total amount of money Quinn will have after 5 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A is the total amount of money after the investment period,
P is the principal amount (the initial investment),
r is the annual interest rate (expressed as a decimal),
n is the number of times interest is compounded per year, and
t is the number of years.
Here, Quinn's initial investment is $50,000, the annual interest rate is 1.6% (or 0.016 as a decimal), and the interest is compounded semiannually (n = 2) for 5 years (t = 5).
Plugging in the values into the formula:
A = $50,000 * (1 + 0.016/2)^(2 * 5)
A = $50,000 * (1 + 0.008)^10
Evaluating the expression inside the parentheses:
A = $50,000 * (1.008)^10
Using a calculator or software to calculate 1.008 raised to the power of 10:
A ≈ $50,000 * 1.083136
Calculating:
A ≈ $54,156.80
Therefore, Quinn will have approximately $54,156.80 after 5 years.