(a) On April 16, Thomas Ash deposited $2,600 in a passbook savings account at 3.5% interest compounded daily. What is the compound amount (in $) of his account on August 5? $ (b) Using daily compounding, calculate the compound amount (in $) of an $8,000 investment for each of the three CDs. The First National Bank is offering a 5 year CD at 4% interest. The Second National Bank is offering a 5 year CD at 3% interest. The Third National Bank has a 5 year CD at 4.5% interest.
(a) On April 16, Thomas Ash deposited $2,600 in a passbook savings account at 3.5% interest compounded daily. What is the compound amount (in $) of his account on August 5? $ (b) Using daily compounding, calculate the compound amount (in $) of an $8,000 investment for each of the three CDs. The First National Bank is offering a 5 year CD at 4% interest. The Second National Bank is offering a 5 year CD at 3% interest. The Third National Bank has a 5 year CD at 4.5% interest.
Intermediate Algebra
10th Edition
ISBN:9781285195728
Author:Jerome E. Kaufmann, Karen L. Schwitters
Publisher:Jerome E. Kaufmann, Karen L. Schwitters
Chapter11: Exponential And Logarithmic Functions
Section11.2: Applications Of Exponential Functions
Problem 25PS
Related questions
Question
As an incentive to attract savings deposits, most financial institutions today offer daily and even continuous compounding. This means that savings, or passbook, accounts, as well as certificates of deposit (CDs), earn interest compounded each day or even more frequently, such as every hour or even every minute. (Continuous compounding, in which compounding occurs every instant, involves a different formula that is derived from the formula we've been using.) Let's take a look at daily compounding.
To calculate the compound amount, A, of an investment with daily compounding, use the compound interest formula modified as follows:
- Rate per period (daily) =
i 365 - Number of periods (days), n, = number of days of the investment.
A = P
1 +
i |
365 |
n | |
Calculator Sequence:
( 1 + ( i ÷ 365 ) ) yx n ✕ P = A.
(Round your answers to the nearest cent.)(a)
On April 16, Thomas Ash deposited $2,600 in a passbook savings account at 3.5% interest compounded daily. What is the compound amount (in $) of his account on August 5?
$
(b)
Using daily compounding, calculate the compound amount (in $) of an $8,000 investment for each of the three CDs.
- The First National Bank is offering a 5 year CD at 4% interest.
- The Second National Bank is offering a 5 year CD at 3% interest.
- The Third National Bank has a 5 year CD at 4.5% interest.
First National Bank:
Second National Bank:
Third National Bank:
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, advanced-math and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Algebra
Algebra
ISBN:
9781285195728
Author:
Jerome E. Kaufmann, Karen L. Schwitters
Publisher:
Cengage Learning
Algebra and Trigonometry (MindTap Course List)
Algebra
ISBN:
9781305071742
Author:
James Stewart, Lothar Redlin, Saleem Watson
Publisher:
Cengage Learning
College Algebra
Algebra
ISBN:
9781305115545
Author:
James Stewart, Lothar Redlin, Saleem Watson
Publisher:
Cengage Learning
Intermediate Algebra
Algebra
ISBN:
9781285195728
Author:
Jerome E. Kaufmann, Karen L. Schwitters
Publisher:
Cengage Learning
Algebra and Trigonometry (MindTap Course List)
Algebra
ISBN:
9781305071742
Author:
James Stewart, Lothar Redlin, Saleem Watson
Publisher:
Cengage Learning
College Algebra
Algebra
ISBN:
9781305115545
Author:
James Stewart, Lothar Redlin, Saleem Watson
Publisher:
Cengage Learning
Algebra & Trigonometry with Analytic Geometry
Algebra
ISBN:
9781133382119
Author:
Swokowski
Publisher:
Cengage
Trigonometry (MindTap Course List)
Trigonometry
ISBN:
9781337278461
Author:
Ron Larson
Publisher:
Cengage Learning