Concept explainers
Financial Planner One part of the job of a financial planner is to help people invest their money appropriately. If a customer knows he or she will need a certain amount of money in 10 or 20 years the financial planner can help the customer plan how much needs to be invested today and and at what rate in order to have that amount When a principal P earns an annual interest rate r compounded yearly the amount A after t years is
How long will it take $1500 to grow to $5000 at 8% compounded annually?
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Intermediate Algebra (Looseleaf) With Worksheet and MyMathLab
- The annual percentage yield (APY) of an investmentaccount is a representation ofthe actual interest rateearned on a compounding account. It is based on acompounding period of one year. Show that the APYof an account that compounds monthly can be foundwith the formula APY=(1+r12)121.arrow_forwardAn Amortization Table Suppose you borrow P dollars at a monthly interest rate of r as a decimal and wish to pay off the loan in t months. Then your monthly payment can be calculated using M=Pr(1+r)t(1+r)t1 dollars. Remember that for monthly compounding, you get the monthly rate by dividing the APR by 12. Suppose you borrow 3500 at a 9 APR meaning that you use r = 0.09/12 in the preceding formula and pay it back in 2 years. a. What is your monthly payment? b. Lets look ahead to the time when the loan is paid off. i. What is the total amount you paid to the bank? ii. How much of that was interest? c. The amount B that you still owe the bank after making k monthly payments can be calculated using the variables r, P, and t. The relationship is given by B=P((1+r)t(1+r)k(1+r)t1) dollars. i. How much do you still owe the bank after 1 year of payments? ii. An amortization table is a table that shows how much you still owe the bank after each payment. Make an amortization table for this loan.arrow_forwardFuture Value In certain savings scenarios, the value F of an investment after t years, the future value, is given by F=P1+rt. Here r is the yearly interest rate as a decimal, P is the amount of the original investment and t is the term of the investment. If we invest 1000 at an interest rate of 0.06 per year as a decimal, and if the term of the investment is 5 years, what is the future value?continuedarrow_forward
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