### Compound Interest Calculation Example**Objective:** Using Table 11-1, calculate the compound amount and compound interest (in $) for the investment, rounding your answers to the nearest cent.#### Investment Details:- **Principal:** $5,100- **Time Period (years):** 2- **Nominal Rate (%):** 8- **Interest Compounded:** Quarterly#### Calculation Fields:- **Compound Amount:** ______- **Compound Interest:** ______For additional guidance, click the "Read It" button under "Need Help?"### Explanation:This exercise involves calculating how much an initial investment (the principal) will grow over a set period of time with a given interest rate, compounded at specified intervals (quarterly in this case).1. **Principal:** The initial amount of money invested or loaned.2. **Time Period:** The duration for which the money is invested or borrowed.3. **Nominal Rate:** The annual interest rate before the effects of compounding.4. **Interest Compounded:** The frequency with which the interest is applied to the principal.The results will provide the total amount in the account (Compound Amount) and the interest earned over the investment period (Compound Interest).

Compound Amount = Principal Amount ×(1 + r)n where, r = Rate of Interest =(8/4 = 2% per quarter) N = Number of periods = (2× 4 = 8 periods)Compound Amount = 5100(1.02)8 = $ 5100 × 1.171659 = $ 5,975.46Compound Interest = Compound Amount - Principal amount = $ 5975.46 - $5100 = $ 875.46

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Using Table 11-1, calculate the compound amount and compound interest (in $) for the investment. (Round your answers to the nearest cent.) Compound Amount Time Nominal Compound Interest Interest Principal Period (years) Rate (%) Compounded $5,100 quarterly $ Need Help? Read It

Using Table 11-1, calculate the compound amount and compound interest (in $) for the investment. (Round your answers to the nearest cent.) Compound Amount Time Nominal Compound Interest Interest Principal Period (years) Rate (%) Compounded $5,100 quarterly $ Need Help? Read It

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Use the formula for computing future value using compound interest to determine the value of an account at the end of 9 years if a principal amount of $18,000 is deposited in an account at an annual interest rate of 3% and the interest is compounded quarterly. Question content area bottom Part 1 The amount after 9 years will be $enter your response here. (Round to the nearest cent as needed.)
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