MT 1123 Lecture Notes - Compound Interest, Money Market Account

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MTH 124 Section 3.2
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Example 1
Find the final value of a 5 year, $2,000 loan at 6% interest compounded:
a) annually
b) semi-annually
c) quarterly
d) monthly
Example 2
Redo Example 1 using continuously compounded interest.
Example 3
If you would like to have $10,000 after 5 years, how much should you
deposit into a money market account that earns 5.9% compounded:
a) quarterly?
b) continuously?
Example 4
If you need $100,000 for your child’s education in 18 years, how much
should you invest now at 7% compounded:
a) semi-annually?
b) continuously?
Example 5
If you had an investment grow from $10,000 to $90,000 over 10 years, what
annual rate would yield the same growth if it was compounded:
a) monthly?
b) continuously?
Example 6
How long would it take $25,000 to grow into $1,000,000 invested at 8%
compounded:
a) quarterly?
b) continuously?
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