For Compound Interest Accounts, the Amount a Accumulated or Due

question 58

Short Answer

For compound interest accounts, the amount A accumulated or due depends on the principal p, interest rate r, number of compoundings per year n, and the time t in years according to the formula . Find r given A = $5462.11, p = $2950, and t = 4 years with interest compounded monthly. Round your answer to the nearest tenth of a percent.

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Definitions:

Present Consumption

The use of goods and services for immediate satisfaction or needs, as opposed to saving for future use.

Loanable Funds

The supply of available capital in the financial markets for borrowing, which can be used for investment purposes by individuals and businesses.

Future Consumption

The use of goods or services at a later date, often facilitated by saving or investing in the present.

Productivity of Capital Goods

The effectiveness with which capital goods, such as machinery and equipment, produce goods or services.