Interest Rate Algebra

Simplificatation, evaluation, linear equations, linear graphs, linear inequalities, basic word problems, etc.
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The Stranger
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Interest Rate Algebra

Postby The Stranger » Sat Nov 06, 2010 5:17 pm

Rick inherits $100,000 and decides to invest it in an account that pays an interest rate of 5% compounded semi-annually for 5 years.

1. Subsititute values into the formula that correspons to the information provided above.

2. To the nearest cent, determine the value of the bond after 5 years.

3. Determine the amount of interest earned by the investment.

I'm so lost, can someone help?

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Martingale
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Re: Interest Rate Algebra

Postby Martingale » Sat Nov 06, 2010 7:10 pm

The Stranger wrote:Rick inherits $100,000 and decides to invest it in an account that pays an interest rate of 5% compounded semi-annually for 5 years.

1. Subsititute values into the formula that correspons to the information provided above.

2. To the nearest cent, determine the value of the bond after 5 years.

3. Determine the amount of interest earned by the investment.

I'm so lost, can someone help?


Do you at least have the formula you are supposed to use?

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The Stranger
Posts: 6
Joined: Wed Oct 06, 2010 4:52 pm
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Re: Interest Rate Algebra

Postby The Stranger » Sat Nov 06, 2010 7:14 pm

Martingale wrote:
The Stranger wrote:Rick inherits $100,000 and decides to invest it in an account that pays an interest rate of 5% compounded semi-annually for 5 years.

1. Subsititute values into the formula that correspons to the information provided above.

2. To the nearest cent, determine the value of the bond after 5 years.

3. Determine the amount of interest earned by the investment.

I'm so lost, can someone help?


Do you at least have the formula you are supposed to use?


I just figured out the formula, I'm not sure if it's right:

A=P(1+i)^n

Where P=principal, i=interest, and n is the number of years.

A=100,000(1+5%)^5

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Martingale
Posts: 350
Joined: Mon Mar 30, 2009 1:30 pm
Location: USA
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Re: Interest Rate Algebra

Postby Martingale » Sat Nov 06, 2010 7:18 pm

The Stranger wrote:
Martingale wrote:
The Stranger wrote:Rick inherits $100,000 and decides to invest it in an account that pays an interest rate of 5% compounded semi-annually for 5 years.

1. Subsititute values into the formula that correspons to the information provided above.

2. To the nearest cent, determine the value of the bond after 5 years.

3. Determine the amount of interest earned by the investment.

I'm so lost, can someone help?


Do you at least have the formula you are supposed to use?


I just figured out the formula, I'm not sure if it's right:

A=P(1+i)^n

Where P=principal, i=interest, and n is the number of years.

A=100,000(1+5%)^5




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