You want to save $5, 000 for future family vacation. If you assume you can get an interest rate of 4.3% compounded monthly, then how much will you need to invest NOW to reach your vacation goal in 3 years?

COMPOUND INTEREST

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	$307, 042, 791
B	$5, 000
C	$3, 250
D	$4, 395.89

Explanation:

Detailed explanation-1: -Answer: The principal amount invested is $4395.93 .

Detailed explanation-2: -k is the number of compounding periods in one year. If the compounding is done annually (once a year), k=1. If the compounding is done quarterly, k=4. If the compounding is done monthly, k=12.

Detailed explanation-3: -Answer and Explanation: The calculated value of the time required to triple the money is 22.517 years.

Detailed explanation-4: -m=Nk m = N k . Ex. An investment of $1000 earning interest of 4% compounded quarterly (4 times per year) is left in the account for 3 years. If we leave our money in for 1 year, the number of compounding periods is 1∗4:m=4 1 ∗ 4 : m = 4 .

Detailed explanation-5: -Compound interest is the interest on savings calculated on both the initial principal and the accumulated interest from previous periods. more. Annual Percentage Rate (APR): What It Means and How It Works.

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ECONOMICS (CBSE/UGC NET)

ECONOMICS

COMPOUND INTEREST