Page 514 - Basic College Mathematics with Early Integers

S E C T I O N 6.6 I PERCENT AND PROBLEM SOLVING: INTEREST 491

Calculator Explorations Compound Interest Factor

A compound interest factor may be found by using your To evaluate, press the keys
calculator and evaluating the formula 1 1 + 0.08 , 2 2 y or ¿ 20 =
x
r n . t
compound interest factor = a1 + b or ENTER . The display will read 2.1911231 . (Note:
n Some calculators will show more digits.) Rounded to
where r is the interest rate, t is the time in years, and n is 5 decimal places, this is 2.19112.
the number of times compounded per year. For example,
the compound interest factor for 10 years at 8% com- Find the compound interest factors. Use the table in
pounded semiannually is 2.19112. Let’s find this factor Appendix A.7 to check your answers.
by evaluating the compound interest factor formula
1. 5 years, 9%, compounded quarterly
when r = 8% or 0.08, t = 10, and n = 2 (compounded
semiannually means 2 times per year).Thus, 2. 15 years, 14%, compounded daily
#
0.08 2 10 3. 20 years, 11%, compounded annually
compound interest factor = a1 + b 4. 1 year, 7%, compounded semiannually
2
0.08 20 5. Find the total amount after 4 years when $500 is
or a1 + b invested at 6% compounded quarterly. (Multiply
2
the appropriate compound interest factor by
$500.)
6. Find the total amount for 19 years when $2500 is
invested at 5% compounded daily.