I inherited $98,500.
b.) What is your interest rate. Choose a rate between 0.5% and 3%.
My inheritance has a 2% interest rate.
c.) Using YEARLY compounding, calculate the accrued value after 5 years, 10 years and 15 years. Show all your work. You can show work as inserted image.
Five years: $108,751.96
Ten years: $120,070.95
Fifteen years: $132,568.03
Please use the above classmate to complete problem:
Keeping the same principle and rate your classmate used in their initial post, you will now calculate the accrued value for a different compounding periods.
- Would you predict quarterly compounding or monthly compounding to earn more interest? Explain why.
- Calculate the accrued, using quarterly compounding value for 5 years, 10 years, and 15 years. Show all work.
- Calculate the accrued value, using monthly compounding for 5 years, 10 years, and 15 years. Show all work.
- Was your prediction in part 1 correct?
- Without doing the calculation, would daily compounding accrue more interest than quarterly and monthly compounding? Explain why.
