Basic Mathematics for College Students

566 Chapter 6 Percent

Solution“Compounded daily” means that compounding will be done 365 times

in a year for 7 years.

This is the compound interest formula.

Substitute the values of P, r, t,and n.

In the exponent, ntmeans n t.

Evaluate the exponent: 365  7 2,555.

Use a calculator. Round to the nearest cent.

The account will contain $80,477.58 at the end of 7 years. To find how much money

the man can withdraw, we must subtract the original principal of $50,000 from the

total amount in the account.

The man can withdraw $30,477.58 without having to touch the $50,000 principal.

80,477.5850,00030,477.58

A80,477.58

A50,000a 1 

0.068

365

b

2,555

A50,000a 1 

0.068

365

b

365 (7)

APa 1 

r

n

b

nt

P$50,000 r6.8%0.068 t 7 n 365

1.$336 2.$660 3.$48.60 4.$3,357.81 5.$8,185.59 6.$20,505.20

ANSWERS TO SELF CHECKS

VOCABULARY

Fill in the blanks.

1. In general, is money that is paid for the use
   of money.


2. In banking, the original amount of money invested,
   deposited, loaned, or borrowed is known as the
   .


3. The percent that is used to calculate the amount of
   interest to be paid is called the interest.


4. interest is interest earned only on the original
   principal.


5. The amount in an investment account is the
   sum of the principal and the interest.


6. interest is interest paid on the principal
   and previously earned interest.

CONCEPTS

7. Refer to the home loan advertisement below.

Home Loan 5% 30-yearfixed

Great mortgage rates

Loans.com

$125,000 available on-line

a. What is the principal?

b. What is the interest rate?

c. What is the time?

8. Refer to the investment advertisement below.

a. What is the principal?

b. What is the interest rate?

c. What is the time?

9. When making calculations involving percents, they
   must be written as decimals or fractions. Change each
   percent to a decimal.
   a. 7% b.9.8% c.


10. Express each of the following as a fraction of a year.
    Simplify the fraction.
    a. 6 months b. 90 days
    c. 120 days d. 1 month

6 14 %

FDIC insured

Guaranteed returns

• 12 month CD


• $10,000 minimum balance

My Bank

Certificate of Deposit

1

.55%

SECTION 6.5 STUDY SET

3

4

6

3

5

 7

2,555