Assume that it is now January 1, 2002. On January 1, 2003, you will deposit $1000 into

Question:

Assume that it is now January 1, 2002. On January 1, 2003, you will deposit $1000 into a savings account that pays 8 %.
a. If the bank compounds interest annually, how much will you have in your account on January 1, 2006?
b. What would your January 1, 2006 balance be if the bank used quarterly rather than annual Suppose you deposited the $1000 in four payments of $250 each on January 1 of 2003, 2004, 2005 and 2006. How much would you have in your account on January 1, 2006 based upon 8% annual Suppose that you deposited 4 equal payments in your account on January 1, 2003, 2004, 2005, and 2006. Assuming an 8% interest rate, how large would each of your payments have to be for you to obtain the same ending balance as you calculated in part a.
Assume that it is now January 1, 2002. On January 1, 2003, you will deposit $1000 into a savings account that pays 8 %.
Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...