50 likes | 67 Views
Calculate the amount accumulated in a savings account over a set period, using compound interest. This tool helps determine the future value of investments based on interest rate, compounding frequency, and number of years.
E N D
4.2 Compound Interest Day 2
Compound InterestA = P(1 + )nt • A = amount of $ accumulated • P = initial amount of $ invested (principle) • r = rate of interest (be sure to change to a decimal before plugging into the equation) • n = # of times interest is compounded per year • t = # of years
Example 1 • Karen Estes just received an inheiritance of $10,000 and plans to place it in a savings account that pays 5% interest compounded quarterly, to help her son go to college in 3 years. How much will she have saved in 3 years?
Example 3 • A principle of $25,000 is invested in an account paying an annual percentage rate of 5%. Find the amount in the account after 2 years if compounded • Semiannually • Quarterly • Monthly
Example 4 • Brian, Eric, Manny and Melissa would like to go to Disneyland in 3 years. Their total cost should be about $4,500. If each invests $1,000 in a savings account paying 5.5% interest, and it is compounded semiannually, will they have enough money in 3 years to take their trip?