Explanation Given Information: An investment with compound amount $ 5 , 500 made for 15 months at 8 interest compounded quarterly. Formula used: Compounding period can be defined as the duration or length of time from one interest payment to the next. If an investment made for 4 years at 6 % compounded annually (once per year) then it would have four compounding period which can be calculated by formula given below: Compounding periods = Term of investments ( years ) × m Here, m is the period per year. The interest rate per period can be calculated by dividing the annual, or nominal, rate by the number of periods per year, Interest rate per period = Nominal rate Period per year The present value (principal) can be calculated by the formula given below: Principal = Table factor × Compound amount In Present value table 11-2, the table factor is the intersection of the rate-per-period column and the number-of-periods row is the present value of $ 1 at compound interest. The compound interest can be calculated by the formula given below: Compound interest = Compound amount − Principal Steps for using the present value table: Step 1: Along the top row for finding the interest rate per period. Step 2: See below that column of the row corresponding to the number of periods. Step 3: The table factor found at the intersection of the rate-per-period column and the number-of-periods row is the present value of $ 1 at compound interest. Now, multiply the table factor by the compound amount for determine the present value as following, Present value = Table factor × Compound amount Calculation: Consider the compound amount $ 5 , 500 made for 15 months at 8 interest compounded quarterly and solve as shown below: Since, the variables-compound amount, time period (years), nominal rate and interest compounded are given; therefore, the compounding period can be calculated as below: Substitute the values in the formula for interest rate per period and simplify, <

Contemporary Mathematics for Business & Consumers

8th Edition

ISBN: 9781305585447

Author: Robert Brechner, Geroge Bergeman

Publisher: Cengage Learning

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Chapter 11, Problem 12AT

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To calculate: The present value (principal) and the compound interest for an investment with compound amount $5,500 made for 15 months at 8 interest compounded quarterly using the table 11−2. Also, round your answer to the nearest cent.

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Chapter 11, Problem 11AT

Chapter 11, Problem 13AT

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Chapter 11 Solutions

Contemporary Mathematics for Business & Consumers

Ch. 11.I - Gail Parker invested $10,000 at 6% interest...Ch. 11.I - Jenny Chao invested $20,000 at 6% interest...Ch. 11.I - Prob. 3TIE Ch. 11.I - Jill Quinn invested $7,000 in a certificate of...Ch. 11.I - Prob. 5TIE Ch. 11.I - Prob. 1RE Ch. 11.I - For the following investments, find the total...Ch. 11.I - For the following investments, find the total...Ch. 11.I - Prob. 4RE Ch. 11.I - Prob. 5RE

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The present value (principal) and the compound interest for an investment with compound amount $ 5 , 500 made for 15 months at 8 interest compounded quarterly using the table 11 − 2 . Also, round your answer to the nearest cent.

Solution Summary: The author calculates the present value (principal) and the compound interest for an investment with compound amount 5,500 made for 15

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To calculate: The present value (principal) and the compound interest for an investment with compound amount $5,500 made for 15 months at 8 interest compounded quarterly using the table 11−2. Also, round your answer to the nearest cent.

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