Explanation Given Information: An investment with principal amount $ 42 , 000 made for 19 years at 11 % interest compounded annually. Formula used: Interest rate per period: It can be calculated by dividing the annual rate by number of periods in each year. Interest rate per period = Nominal rate Period per year Compounding periods: It can be calculated by multiplying the number of years by number of periods in each year. Compounding period = Years × Period per year Compound amount: It can be calculated by multiplication of the table factor with principal. Compound amount ( F V ) = Table factor × Principal Compound Interest: It can be calculated by subtraction of the principal from compound amount. Compound Interest = Compound Amount − Principal Compound Interest table: This table is a set of factors that represent future values of $ 1 . The future values of further principal amounts can be calculated by multiplication of the correct table factor by the number of dollars of principal. Steps for the use of the compound interest table: Step I: The interest rate per period is computed by scanning across the top row. Step II: Look below at that column to the row, which is same as the number of periods. Step III: Find the compound amount by multiplying the table factor which is the intersection of corresponding rate-per-period column and the number-of-periods row. Calculation: The values of investment are: Principal: $ 42 , 000 Time-period: 19 Nominal rate: 11 Interest compounded: annually Calculate the interest rate and number of compounding periods

Contemporary Mathematics for Business & Consumers

8th Edition

ISBN: 9781305585447

Author: Robert Brechner, Geroge Bergeman

Publisher: Cengage Learning

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Chapter 11, Problem 4AT

To determine

To calculate: The compound amount and compound interest for an investment of $42,000 made for 19 years at 11% interest compounded annually using the compound interest table (Table 11−1).

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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 compound amount and compound interest for an investment of $ 42 , 000 made for 19 years at 11 % interest compounded annually using the compound interest table (Table 11 − 1 ).

Solution Summary: The author calculates the compound amount and compound interest for an investment of 42,000 made for 19 years at 11% interest compounded annually.

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To calculate: The compound amount and compound interest for an investment of $42,000 made for 19 years at 11% interest compounded annually using the compound interest table (Table 11−1).

Chapter 11 Solutions