Question

Cushing, Inc. invested $226821 in an account paying 7% per year, compounded monthly. How much will Cushing have in its account in 9 years?

Answer 1

I have a solution. I would like for someone to look at it plz.

Answer 2

@hartnn

Answer 3

This is how I solved it.

Answer 4

r = 7/12 = 58.33% per month this is the nominal annual interest rate

Answer 5

then I used i =(1+(0.5833/12))^12-1 = 76.75% this is the effective annual interest rate

Answer 6

Then I used F =P(1+i)^n = 226821(1+0.7675)^9 = 38198334.03

Answer 7

is it right?

Answer 8

i did it wrong... I think i see something wrong

Answer 9

Can I use F = P(e^rn)?

Answer 10

cant use that...

Answer 11

I need to find i = r/m right then I can use F = P(F/P, i, n)??

Answer 12

I got F = 239,010.77 as my answer

Answer 13

hello????

Answer 14

for monthly compounded problems,
I generally use this formula,
\(F= P (1+i/12)^{n/12}\)
P = 226821
i = 0.07
n= 9

Answer 15

what?? why is n/12?

Answer 16

oops, thats 12n
and not n/12

Answer 17

\(\large F= P (1+i/12)^{12n}\)

Answer 18

and i got
425102.6949...

Answer 19

why is it 12n?

Answer 20

let me do something really quick.

Answer 21

for 1st month,
(1+i/12)^n

for 2nd month
(1+i/12)^n

and so on, for 12th month too
(1+i/12)^n

multiplying all these together,
\( [(1+i/12)^n]^{12}\)

Answer 22

I am not understanding what r is in my text r = i*m which is your nominal annual interest rate and i = r/m is your effective annual interest rate

Answer 23

so it's already a nominal interest rate?

Answer 24

i am not familiar with those terms

i can explain you how we have i/12 and 12n

interest rate per year = 7%
so interest rate per month = 7%/12

and interest is compounded monthly, so there will be 12 such compounds (1+i/12)^n, one for each month, multiplied together

Answer 25

similarly, if we had to compound daily,
the formula would become,
\(\Large F = P (1+i/365)^{365n}\)

Answer 26

I am going to try to solve this using another method and use your solution as the key. Thanks for you rhelp

Answer 27

yeah, verify if you get 425102.6949...
from other method..
welcome ^_^