Question

Find the amount to which $775 will grow under each of the following conditions. Do not round intermediate calculations. Round your answers to the nearest cent.

1. 12% compounded annually for 5 years.

   $   

2. 12% compounded semiannually for 5 years.

   $   

3. 12% compounded quarterly for 5 years.

   $   

4. 12% compounded monthly for 5 years.

   $   

Answer 1

a.We use the formula:  
A=P(1+r/100)^n
where   
A=future value
P=present value  
r=rate of interest
n=time period.

A=775*(1.12)^5

=775*1.76234168

=$1365.81(Approx)

b.We use the formula:  
A=P(1+r/2)^2n
where   
A=future value
P=present value  
r=rate of interest
n=time period.

A=775*(1+0.12/2)^(2*5)

=775*1.7908477

=$1387.91(Approx)

c.We use the formula:  
A=P(1+r/4)^4n
where   
A=future value
P=present value  
r=rate of interest
n=time period.

A=775*(1+0.12/4)^(4*5)

=775*1.80611123

=$1399.74(Approx)

d.We use the formula:  
A=P(1+r/12)^12n
where   
A=future value
P=present value  
r=rate of interest
n=time period.

A=775*(1+0.12/12)^(12*5)

=775*1.8166967

=$1407.94(Approx)