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FINANCE. You deposit $4000 in an account that pays 2.92% annual interest. Find the balance after 1 year if the interest is compounded with the given frequency. EXAMPLE 5. Find the balance in an account. a. Quarterly. b. Daily. = 4000 1 +. 0.0292. r. 4. n. - PowerPoint PPT Presentation
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EXAMPLE 5 Find the balance in an account
You deposit $4000 in an account that pays 2.92% annual interest. Find the balance after 1 year if the interest is compounded with the given frequency.
FINANCE
a. Quarterly
b. Daily
EXAMPLE 5 Find the balance in an account
= 4000 1 + 0.0292 4
4 1
= 4000(1.0073)4
= 4118.09
P = 4000, r = 0.0292, n = 4, t = 1
Simplify.
Use a calculator.
ANSWER The balance at the end of 1 year is $4118.09.
SOLUTION
a. With interest compounded quarterly, the balance after 1 year is:
A = P 1 + rnnt
Write compound interest formula.
EXAMPLE 5 Find the balance in an account
b. With interest compounded daily, the balance after 1 year is:
A = P 1 + rnnt
= 4000 1 + 0.0292 365
365 1
= 4000(1.00008) 365
= 4118.52
Write compound interest formula.
P = 4000, r = 0.0292, n = 365, t = 1
Simplify.
Use a calculator.
ANSWER
The balance at the end of 1 year is $4118.52.
GUIDED PRACTICE for Example 5
6. FINANCE You deposit $2000 in an account that pays 4% annual interest. Find the balance after 3 years if the interest is compounded daily.
$2254.98ANSWER
= 2000 1 + 0.04 365
3 365
= 2000(1.00011) 1095
= 2254.98
P = 2000, r = 0.04, n = 365, t = 3
Simplify.
Use a calculator.
a. With interest compounded daily, the balance after 3 years is:
A = P 1 + rnnt
Write compound interest formula.