This problem can be solved using the compound interest formula: A=P(1+r/n)^(n*t). Here, A = the amount yielded, P = the principal (i.e. initial) invested amount), r = the interest rate (as a decimal), n = the number of times per year, and t = the time invested. A great way to solve a problem like this is graphically. That is, you can enter a quantity as the "P" value, let your interest rate be 16% (as a decimal, .16), and then simply set your equation up so that it is equal to the amount desired (here, double the principle).
Let's take your instructor's example of 500invested,andlet′slettheinterestratebe.14(14500 at an annual interest rate of 14% (therefore the number of times per year, "n" equals 1). Our equation will look something like this:
A=500(1.14)^x, where "x" is the number of years.
Then, we fix the amount ("A") at 1000,andwehave:1000=500(1.14)x2=1.14xlog1.14(2)=xx=5.29So,ifweinvest500 at 14% interest, it will take 5.29 years to double our money.
Another option to solve this equation is to graph it by subtracting "1000" from both sides and looking for the x-intercept, as follows:
y=500(1.14)^x-1000
Sunday, March 1, 2015
Determine an interest rate less than 15%, a period of investment greater than two years, and a regular payment that will result in the total amount of interest you earn being equal to the total amount of money you put in. (For example, under what conditions will you have a future value of 1,000,000,havingearned500,000 interest?)
Subscribe to:
Post Comments (Atom)
What is the theme of the chapter Lead?
Primo Levi's complex probing of the Holocaust, including his survival of Auschwitz and pre- and post-war life, is organized around indiv...
-
The statement "Development policy needs to be about poor people, not just poor countries," carries a lot of baggage. Let's dis...
-
Primo Levi's complex probing of the Holocaust, including his survival of Auschwitz and pre- and post-war life, is organized around indiv...
-
"Mistaken Identity" is an amusing anecdote recounted by the famous author Mark Twain about an experience he once had while traveli...
-
De Gouges's Declaration of the Rights of Woman was enormously influential. We can see its influences on early English feminist Mary Woll...
-
As if Hamlet were not obsessed enough with death, his uncovering of the skull of Yorick, the court jester from his youth, really sets him of...
-
The difference between Charlie at the beginning and the ending of the story Flowers for Algernon by Daniel Keyes lies in his degree of conte...
No comments:
Post a Comment