looking for good explaination

[lotus22]

Can someone explain this for me......show me the steps to solve by plugging it into an equation.
Starting Principal: 1,800.00
Interest Rate: 4.5%
Years: 5 Periodic compounding: P(1 + r/n)Yn for n equal to...
1 $2,243.13
4 $2,251.35
12 $2,253.23
365 $2,254.15
365x24 $2,254.18

 

[lookagain]

Can someone explain this for me......show me the steps to solve by plugging it into an equation.
Starting Principal: 1,800.00
Interest Rate: 4.5%

Years: 5 Periodic compounding:

A = P(1 + r/n)^[(Y)(n)]

\(\displaystyle A \ = \ P\bigg(1 + \frac{r}{n}\bigg)^{[(Y)(n)]}\)

for n equal to...


1 \(\displaystyle ---> annually \ gives \ \$2,243.13 \)

4 \(\displaystyle ---> quarterly \ gives \ \$2,251.35 \)

12 \(\displaystyle ---> monthly \ gives \ \$2,253.23 \)

365 \(\displaystyle ---> daily \ gives \ \$2,254.15 \)

365x24 \(\displaystyle = \ 8760 \ gives \ \$2,254.18\)

A = amount of money at the end

P = principal (Here, it is $1,800.)

r = rate expressed as a decimal (Here, 0.045 = r.)

n = number of compoundings per year

Y = number of years for which it is compounded

(For these, Y = 5.)


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Let's start you off on one of these:

Exercise example:

n = 4 (quarterly)


\(\displaystyle A \ = \ 1800\bigg(1 + \frac{0.045}{4}\bigg)^{[(5)(4)]}\)


Work this out and compare it to the answer you listed.


If you enter this into one of the lower-modeled TI-graphics calculators,

it should possibly look like this version:


1800(1 + 0.045/4)^(5*4)