CE40/A3

28 July 31, 2017

SARMIENTO, JOHN KELVIN M.
2014106969 CE/3

ACTIVITY
CW # 2
1. Suppose you invest $32,000 into a certificate of deposit that has an
annual interest rate of 5.2% compounded annually for 3 years.
Determine its accrued value.

Solution:
. 052 (4)(3)
= 32000(1 + ) = 32000(1.013)12
4
= $37,364.86

2. Find the annual yield for an investment that has an annual interest
rate of 8.4% compounded monthly.

Solution:
. 084 12
= (1 + ) 1
12
= (1.007)12 1
= 0.087310661 = 8.73%
3. Consider the $32,000 from the earlier example. Now we will invest the
money in an account that has 5.2% annual interest compounded
continuously for 3 years. What is the future value?

Solution:
= 32000 (0.52)(3) = $37,402.44
What is the yield for this investment?

Solution:
= (0.52) 1 = 0.05337 = 5.34%
SCREENSHOTS