Exponents (the number e) Please help!

[zee]

I don't know how to attempt this problem. Please expalin how to do it.

If money is invested at 8% compounded semiannually, then each year the investment is multiplied by 1.04 squared. What is the investment multiplied by if interest is compounded quarterly?

Thank You

 

[stapel]

I'm not sure why your subject line refers to "the number e"...?

Just plug into the compound-interest formula:


. . . . .\(\displaystyle \large{A\,=\,P\left(1\,+\,\frac{r}{n}\right)^{nt}}\)


...where A is the "ending amount", P is the "beginning amount", r is the "interest rate" (expressed as a decimal), n is the "number of compoundings" (usually "per year"), and t is the "number of years".

For instance, "monthly" means n = 12; "yearly interest rate of 16%" means r = 0.16; "invested for nine months" means t = 9/12 = 0.75.

If the investment "P" is compounded quarterly at an interest rate of 8%, then what are the values of "r" and "n"? (I would guess that you're supposed to assume that t = 1, but the exercise should have stated this.) Plug these values in, and simplify the stuff after the "P" in the formula. This will give you your answer.

If your book wants you to do this some other way, please reply with clarification. Thank you.

Eliz.

 

[zee]

need more help! Compound Interest formula

So according to the question, n would equal 4 and r would equal .08. What about the other values?

I wrote "the number e" because it was the section of the book.

Thank You

 

[tkhunny]

You're talking about peridos of one year. Quarterly is four.

 

[stapel]

So...n would equal 4 and r would equal .08. What about the other values?

I already suggested that, unless the book specifies something else, you should assume that t = 1. There are no other values following the variable "P". Just simplify what you've got.

Eliz.