Part V: Compound Interest Periodic Compound Interest is interest (earned or paid) calculated at a regular...
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Part V: Compound Interest Periodic Compound Interest is interest (earned or paid) calculated at a regular time interval on the current principle as well as previously accrued interest. The formula used to calculate periodic compound interest is: future value P-present value (principle) r-annual interest rate (as a decimal) n-compounding (number of times per year that interest is added) t-time (in years) 17. Suppose you are going to make a one-time investment of $10,000 into a retirement account earning 4% interest compounded annually. Use the format above to write an equation that can be used to find how much money will be in the retirement account after r years. Then complete the table. (Round to the nearest penny.) t A 10000 10,198.04 A 10000 Formula: 7= 1 P=10000 (40004 (1.04)* 10,400 A: 10,816 211911-23 18. Suppose you are going to make a one-time investment of $10,000 into a retirement account earning 4% interest compounded semi-annually. Use the format above to write an equation that can be used to find how much money will be in the retirement account after t years. Then complete the table. (Round to the nearest penny.) A P = 10,000 Formula: = 10/600 (1.02)2+ 0=2 F = 4% A = 10,000 (1+0. at 11= 10,000 (1.00) 2² Compare the calculations in #17 and # 18. If the interest is added semi- annually does this mean that we earn a total of 8% per year? Explain. Why do we earn more money when the compounding is semiannually? 0 0.5 1 2 20 t 0 0.5 1 2 20 10,000 10.200 10,404 10,612 10/824 Part V: Compound Interest Periodic Compound Interest is interest (earned or paid) calculated at a regular time interval on the current principle as well as previously accrued interest. The formula used to calculate periodic compound interest is: future value P-present value (principle) r-annual interest rate (as a decimal) n-compounding (number of times per year that interest is added) t-time (in years) 17. Suppose you are going to make a one-time investment of $10,000 into a retirement account earning 4% interest compounded annually. Use the format above to write an equation that can be used to find how much money will be in the retirement account after r years. Then complete the table. (Round to the nearest penny.) t A 10000 10,198.04 A 10000 Formula: 7= 1 P=10000 (40004 (1.04)* 10,400 A: 10,816 211911-23 18. Suppose you are going to make a one-time investment of $10,000 into a retirement account earning 4% interest compounded semi-annually. Use the format above to write an equation that can be used to find how much money will be in the retirement account after t years. Then complete the table. (Round to the nearest penny.) A P = 10,000 Formula: = 10/600 (1.02)2+ 0=2 F = 4% A = 10,000 (1+0. at 11= 10,000 (1.00) 2² Compare the calculations in #17 and # 18. If the interest is added semi- annually does this mean that we earn a total of 8% per year? Explain. Why do we earn more money when the compounding is semiannually? 0 0.5 1 2 20 t 0 0.5 1 2 20 10,000 10.200 10,404 10,612 10/824
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