   Chapter 11, Problem 38AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Quinn and Julius inherited $50,000 each from their great-grandmother’s estate. Quinn invested her money in a 5-year CD paying 1.6% interest compounded semiannually. Julius deposited his money in a money market account paying 1.05% compounded monthly.a. How much money will each have in 5 years? Round to the nearest whole dollar.b. How much compound interest will they each have earned at the end of 5 years? (a) To determine To calculate: The amount of money each Quinn and Julius will have earned after 5 years, if Quinn and Julius inherited$50,000 each and Quinn invested his money in 5 years CD paying 1.6% interest compounded semiannually while Julius deposited her money in a money market account which pays 1.05% interest compounded monthly.

Explanation

Given Information:

Quinn and Julius inherited $50,000 each and Quinn invested his money in 5 years CD paying 1.6% interest compounded semiannually while Julius deposited her money in a money market account which pays 1.05% interest compounded monthly. Formula used: Formula to calculate future amount on an investment. Future Value=Principal(1+R100n)nt. Where, R is the rate of interest, n is the compounding of interest and t is the time period. Calculation: Since, the principal amount for both Quinn and Julius is$50,000 and Quinn invested his money in 5 years CD paying 1.6% interest compounded semiannually.

So,

P=$50,000t=5n=2R=1.6% Hence, the money Quinn will have after 5 years is; FV=50,000(1+1.62100)(5)(2)=50,000(201.6200)10=50,000(1.008)10 Use the calculator and the steps of calculator is shown below; Calculator sequence: 1.008 yx 10 = 1 (b) To determine To calculate: The compound interest each will earn after 5 years, if Quinn and Julius inherited$50,000 each and Quinn invested his money in 5 years CD paying 1.6% interest compounded semiannually while Julius deposited her money in a money market account which pays 1.05% interest compounded monthly.

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