need help w/ compound-interest word problems

[jscrilla]

hi any help would be nice these problems are troublin me!!

1) If interest is compounded continuously, what annual rate must you receive if your investment of $2600 is to grow to $4000 in two years?

2) If an investment of $3500 grows to $4249.13 in four and a half years, with an annual interest rate that is compounded quarterly, what is the annual interest rate?

3) Lisa Chow wants to have $40,000 available in ten years for a down payment on a house. She has inherited $35,000. How much of the inheritance should be invested at 4.6% annual interest, compounded quarterly, to accumulate the $40,000?

4) A sum of money P that can be deposited today to yield some larger amount A in the future is called the present value of A. If A = $8,000 at 6% compounded annually for 4 years, find the present value of A. (Hint: Substitute A, the interest rate per period r, and the number t of periods in the compound interest formula and solve for P.)

 

[stapel]

1) If interest is compounded continuously, what annual rate must you receive if your investment of $2600 is to grow to $4000 in two years?

Plug A = 4000, P = 2600, and t = 2 into the continuously-compounded interest formula they gave you, and solve (by logs) to find the value of the interest rate r. Remember to convert the decimal to a percentage when you write your final answer.

2) If an investment of $3500 grows to $4249.13 in four and a half years, with an annual interest rate that is compounded quarterly, what is the annual interest rate?

Plug P = 3500, A = 4249.13, t = 4.5, and n = 4 into the compound-interest formula you've memorized, and solve for t.

3) Lisa Chow wants to have $40,000 available in ten years for a down payment on a house. She has inherited $35,000. How much of the inheritance should be invested at 4.6% annual interest, compounded quarterly, to accumulate the $40,000?

Plug A = 40000, r = 0.046, n = 4, and t = 10 into the compound-interest formula, and solve for the amount of P. Remember to put a "dollar" sign on your answer.

4) A sum of money P that can be deposited today to yield some larger amount A in the future is called the present value of A. If A = $8,000 at 6% compounded annually for 4 years, find the present value of A. (Hint: Substitute A, the interest rate per period r, and the number t of periods in the compound interest formula and solve for P.)

Just follow the hint.

If you get stuck, please reply showing what you have tried and how far you have gotten. Thank you!

Eliz.