Compound Interest Problem

Question

[On all these questions #1-4, do not do any rounding until the very end]

A) Phillip wants to have $18,000 in 9 years, so he will place money into a savings account that pays 2.8% interest compounded weekly. How much should Phillip invest now to have $18,000 in 9 years?

B) Charla would like to save $20,000 for a down payment for her first house. She currently has $15,000. At what interest rate, compounded monthly, would she need to invest her money in order to have the required $20,000 in 10 years? Round to the nearest 0.01%

[Show algebraic work in finding the interest rate]



C) Emile Invests $50,000 into an account at an annual rate of 1.5% compounded continuously. How much will be in the account after 30 years? Round to the nearest cent.

Answer 1

A) 18000 = p(1 + 0.028/52)^(9)(52)

B) 20000 = 15000(1 + r/52)^(9)(52)

C) A = 15000e^10r