Modelling Compound Interest
Interactive practice questions
The balance of an investment, in dollars, at the end of each year where interest is compounded annually is given by $A_n=1.06A_{n-1}$An=1.06An−1, $A_0=5000$A0=5000.
State the annual interest rate.
Determine the balance at the end of the first year.
Use the sequences facility on your calculator to determine the balance at the end of $10$10 years.
Give your answer to the nearest cent.
The balance of an investment, in dollars, at the beginning of each quarter where interest is compounded quarterly is given by $A_n=1.02A_{n-1}$An=1.02An−1, $A_1=5000$A1=5000.
The balance of an investment, in dollars, at the end of each month where interest is compounded monthly is given by $A_n=1.015A_{n-1}$An=1.015An−1, $A_0=2000$A0=2000.
The investment began at the beginning of January 2010.
$\$5000$$5000 is invested at the beginning of the year in an account that earns $3%$3% per annum interest, compounded annually.