Revision as of 21:41, 29 November 2023 by Admin (Created page with "Maxine invests 1000 at the end of each year for 5 years at an effective rate of .10 per year, with interest payable annually. She reinvests the interest each year at rate .08 per year. Find the accumulated value at the end of 5 years. <ul class="mw-excansopts"> <li>5867</li> <li>6000</li> <li>6084</li> <li>6105</li> <li>6150</li> </ul> '''References''' {{cite web |url=https://web2.uwindsor.ca/math/hlynka/392oldtests.html |last=Hlynka |first=Myron |website=web2.uwind...")
Nov 29'23
Exercise
Maxine invests 1000 at the end of each year for 5 years at an effective rate of .10 per year, with interest payable annually. She reinvests the interest each year at rate .08 per year.
Find the accumulated value at the end of 5 years.
- 5867
- 6000
- 6084
- 6105
- 6150
References
Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.
Nov 29'23
Solution: C
The time diagram is
| Time | 0 | 1 | 2 | 3 | 4 | 5 |
| Deposit | 1000 | 1000 | 1000 | 1000 | 1000 | |
| CumDeposit | 1000 | 2000 | 3000 | 4000 | 5000 | |
| Interest | 100 | 200 | 300 | 400 |
Hence the accumulated amount is
[[math]]
5000+100(I s)_{\overline{4} \mid .08}=5000+100 \frac{\ddot{s}_{\overline{4} \mid .08}-4}{.08}=5000+100 \frac{4.866601-4}{.08}=6083.25
[[/math]]
References
Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.