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    Amount of money in a savings account

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    Determine the amount of money in a savings account at the end of five years, given an initial deposit of $5,000 and a 12 percent annual interest rate when interest is compounded (a) annually (b) semiannually, and (c) quarterly.

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    Solution Preview

    Amount = Principal (1+r)^n

    In case of semi annual effective r= r/2=12/2=6% and effective n= ...

    Solution Summary

    This explains the steps to compute the amount of money in a savings account by using the concepts of time value of money