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Section 5.7 Financial Models
OBJECTIVE 1
 
 
A credit union pays interest of 4% per annum compounded quarterly on a certain savings plan.  If $2000 is deposited in such a plan and the interest is left to accumulate, how much is in the account after 1 year?
 
 
 
 
 
Find the amount  A  that results from investing a principal  P  of $2000 at an annual rate  r  of 8% compounded continuously for a time  t  of 1 year.
OBJECTIVE 2
 
Suppose you want to open a money market account.  You visit three banks to determine their money market rates.  Bank A offers you 5% compounded monthly and Bank B offers you 5.04% compounded quarterly.  Bank C offers 4.9% compounded continuously.  Determine which bank is offering the best deal.
OBJECTIVE 3
 
[object Object],[object Object]
OBJECTIVE 4
What annual rate of interest compounded quarterly should you seek if you want to double your investment in 6 years?
[object Object],[object Object]

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Sulpcegu5e ppt 5_7

  • 3.  
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  • 5. A credit union pays interest of 4% per annum compounded quarterly on a certain savings plan. If $2000 is deposited in such a plan and the interest is left to accumulate, how much is in the account after 1 year?
  • 6.  
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  • 9.  
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  • 11. Find the amount A that results from investing a principal P of $2000 at an annual rate r of 8% compounded continuously for a time t of 1 year.
  • 13.  
  • 14. Suppose you want to open a money market account. You visit three banks to determine their money market rates. Bank A offers you 5% compounded monthly and Bank B offers you 5.04% compounded quarterly. Bank C offers 4.9% compounded continuously. Determine which bank is offering the best deal.
  • 16.  
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  • 19. What annual rate of interest compounded quarterly should you seek if you want to double your investment in 6 years?
  • 20.