I start out with 7,500
rate is 0.01%
Can I get help with #1 and can someone check #2? Thanks!
1. Calculate the amount of your compound interest investment after 10 years. Remember that you are starting with $7,500.
2. Calculate the amount of your simple interest investment after 10 years. Remember to use the same rate and compounding as in #1.0.01% * 7,500 = 75
75 * 10 = 750
Answer: 750
put this in your google search engine:
7500(1.01)^10=
the second is correct for interest, but the value is now 7,500+750
Thank you
1. Since the compounding frequency was not given, how do you know it was compounded annually?
LillyPrince said the rate was .01%, which is .0001 as a decimal.
Probably a misprint, and bob assumed it to be.
For #1: To calculate the compound interest investment after 10 years, you need to use the compound interest formula:
A = P(1 + r/n)^(n*t)
Where:
A = the amount after t years
P = the principal (initial amount), which is $7,500 in this case.
r = the annual interest rate, given as 0.01% or 0.0001 in decimal form.
n = the number of times the interest is compounded per year. Since the compounding period is not given, we'll assume it's compounded annually, so n = 1.
t = the number of years, which is 10 in this case.
Now, let's calculate the compound interest after 10 years:
A = 7,500 * (1 + 0.0001/1)^(1*10)
A = 7,500 * (1 + 0.0001)^10
A = 7,500 * (1.0001)^10
A ≈ 7,500 * 1.0001^10
A ≈ 7,500 * 1.000104622
A ≈ 7,500 * 1.00104622
A ≈ 7,507.84
Therefore, the amount of your compound interest investment after 10 years would be approximately $7,507.84.
For #2: As mentioned in your answer, you correctly calculated the simple interest investment. The formula for simple interest is:
A = P(1 + r*t)
Where:
A = the amount after t years
P = the principal (initial amount), which is $7,500 in this case.
r = the annual interest rate, given as 0.01% or 0.0001 in decimal form.
t = the number of years, which is 10 in this case.
Now, let's calculate the simple interest after 10 years:
A = 7,500 * (1 + 0.0001*10)
A = 7,500 * (1 + 0.001)
A = 7,500 * 1.001
A ≈ 7,507.50
So, the amount of your simple interest investment after 10 years would be approximately $7,507.50.
It looks like your calculation for #2 is slightly off, as it should be $7,507.50 instead of $750.