You invest $500 in an account that earns interest compounded monthly. Use a table or graph to find the least annual interest rate (to the nearest tenth of a percent) that the account would have to...
You invest $500 in an account that earns interest compounded monthly. Use a table or graph to find the least annual interest rate (to the nearest tenth of a percent) that the account would have to earn if you want to have a balance of $600 in 4 years.
- print Print
- list Cite
Expert Answers
calendarEducator since 2012
write340 answers
starTop subjects are Math, Science, and Business
It sounds like they want you to take a stab at what you would get in 4 years from $500 at different interest rates compounded monthly. You'll need to use the discrete compounding equation here:
`A = P(1+r/n)^(nt)`
Here, A is the future value of the money, P is the principle (original amount you put in, $500), r is the annual interest rate, n is the number of intervals in the year that you are compounding (here, 12 because monthly), and t is the number of years (4).
Plugging in all of the numbers gets you the following relation with respect to rate:
` `
`A = 500(1+r/12)^(12*4)`
`A =...
(The entire section contains 283 words.)
Unlock This Answer Now
Start your 48-hour free trial to unlock this answer and thousands more. Enjoy eNotes ad-free and cancel anytime.
Related Questions
- Jamal wants to invest $150 every month for 10 years. At the end of that time he would like to...
- 1 Educator Answer
- Noha is investing $2517 in an account compounded monthly. She wants to have $3000 in 3 years for...
- 2 Educator Answers
- How long will it take an investment to double in value if the interest rate is 11% compounded...
- 1 Educator Answer
- How much money should be invested in an account that earns 8% annual interest compounded monthly...
- 2 Educator Answers
- If I invest $500 in a mutual fund that earns 3% interest with a 0.5% annual fee and a $25 annual...
- 1 Educator Answer
thank you very much
Student Answers