Sean Paul Makes Deposits of $500

question 124

Essay

Sean Paul makes deposits of $500.00 at the beginning of every three months. Interest earned by the deposits is 8% compounded quarterly.
a) What will the balance in Sean's account be after ten years?
b) How much of the balance will Sean have contributed?
c) How much of the balance is interest?

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Definitions:

Multinomial Distribution

A generalization of the binomial distribution, which deals with outcomes of a experiment that can fall into more than two categories.

Categories

Distinct groups or classes into which data can be classified.

Expected Frequency

The number of times an event is predicted to occur within a specified number of trials or over a given period of time, based on probability.

Observed Frequency

The count of occurrences or instances of a particular event or characteristic in a data set.