## Interest Rate Algebra

Simplificatation, evaluation, linear equations, linear graphs, linear inequalities, basic word problems, etc.
The Stranger
Posts: 6
Joined: Wed Oct 06, 2010 4:52 pm
Contact:

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? Martingale Posts: 333 Joined: Mon Mar 30, 2009 1:30 pm Location: USA Contact: ### Re: Interest Rate Algebra 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?

The Stranger
Posts: 6
Joined: Wed Oct 06, 2010 4:52 pm
Contact:

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 Martingale Posts: 333 Joined: Mon Mar 30, 2009 1:30 pm Location: USA Contact: ### Re: Interest Rate Algebra 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
$A= P \left(1 + \frac {r} {n}\right) ^ {nt}$