Discussion 4 pt 2


I inherited $98,500. 

b.) What is your interest rate. Choose a rate between 0.5% and 3%. 

My inheritance has a 2% interest rate. 

c.) Using YEARLY compounding, calculate the accrued value after 5 years, 10 years and 15 years. Show all your work. You can show work as inserted image. 

Five years: $108,751.96

Ten years: $120,070.95

Fifteen years: $132,568.03

Please use the above classmate to complete problem:

Keeping the same principle and rate your classmate used in their initial post, you will now calculate the accrued value for a different compounding periods.

  1. Would you predict quarterly compounding or monthly compounding to earn more interest? Explain why.
  2. Calculate the accrued, using quarterly compounding value for 5 years, 10 years, and 15 years. Show all work.
  3. Calculate the accrued value, using monthly compounding for 5 years, 10 years, and 15 years. Show all work. 
  4. Was your prediction in part 1 correct?
  5. Without doing the calculation, would daily compounding accrue more interest than quarterly and monthly compounding? Explain why.
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