1.
- year 1: \(5000(1.05) = 5250\) ; quarterly: \(5000\bigg(1 + \dfrac{.05}{4}\bigg)^4\)year 2: \(5000(1.05)^2 =5512.50\); quarterly: \(5000\bigg(1 + \dfrac{.05}{4}\bigg)^8\)year 3: \(5000(1.05)^3 = 5788.13\); quarterly: \(5000\bigg(1 + \dfrac{.05}{4}\bigg)^{12}\)year 4: \(5000(1.05)^4 = 6077.53\); quarterly: \(5000\bigg(1 + \dfrac{.05}{4}\bigg)^{16}\)
- Earnings: \(5000\bigg(1 + \dfrac{.05}{n}\bigg)^{nt}\); where \(n\) is the number of times per year that the interest is calculated and \(t\) is the number of years.
- Simple interest is \(5000 + 5000(.05)(5) = 6250\)
Compounded daily: \(5000\bigg(1 + \dfrac{.05}{360}\bigg)^{360\cdot5}= 6420.25\)
Return to Practice (Compound Interest)
Go to Watch (Half-Life)