13.2. Compound Interest per Year http://www.ck12.org
3.PV= 100 ,FV= 120 ,t= 3 ,i=?
FV=PV( 1 +i)t
120 = 100 ( 1 +i)^3(^13) = [( 1 +i) (^3) ] (^13)
(^13) = 1 +i
i= 1. 213 − 1 ≈ 0. 06266
Practice
For problems 1-10, find the missing value in each row using the compound interest formula.
TABLE13.4:
Problem Number PV FV t i
- $1,000 7 1.5%
- $1,575 $2,250 5
- $4,500 $5,534.43 3%
- $10,000 12 2%
- $1,670 $3,490 10
- $17,000 $40,000 25
- $10,000 $17,958.56 5%
- $50,000 30 8%
- $1,000,000 40 6%
- $10,000 50 7%
- How long will it take money to double at 4% compound interest? Estimate using the rule of 72 and also find
the exact answer. - How long will it take money to double at 3% compound interest? Estimate using the rule of 72 and also find
the exact answer. - Suppose you have $5,000 to invest for 10 years. How much money would you have in 10 years if you earned
4% simple interest? How much money would you have in 10 years if you earned 4% compound interest? - Suppose you invest $4,000 which earns 5% compound interest for the first 12 years and then 8% compound
interest for the next 8 years. How much money will you have after 20 years? - Suppose you invest $10,000 which earns 2% compound interest for the first 8 years and then 5% compound
interest for the next 7 years. How much money will you have after 15 years?