Kandace Reid
September 18, 2023
5. You deposit $300 in an account earning 5% interest compounded annually. How much will
you have in the account in 10 years?
Excel:
Starting Interest Ending
Month Balance Rate Interest Balance
$ $ $
1 300.00 5.00% 15.00 315.00
$ $ $
2 315.00 5.00% 15.75 330.75 Financial Model
$ $ $
3 330.75 5.00% 16.54 347.29
$ $ $
4 347.29 5.00% 17.36 364.65
$ $ $
5 364.65 5.00% 18.23 382.88
$ $ $
6 382.88 5.00% 19.14 402.03
$ $ $
7 402.03 5.00% 20.10 422.13
$ $ $
8 422.13 5.00% 21.11 443.24
$ $ $
9 443.24 5.00% 22.16 465.40
$ $ $
10 465.40 5.00% 23.27 488.67
Solution
In this transaction, I will make about $488.67 over the span of 10 years with 5% interest.
Explanation:
The principal amount is plugged into B1, the interest rate is plugged into C1. B1 is then
multiplied with C1 to get the interest rate located in D1. By following A1 down the 10 years you
are able to get your ending balance.
6. How much will $1000 deposited in an account earning 7% interest compounded annually be
worth in 20 years?
Excel:
Starting Interest Ending
Month Balance Rate Interest Balance
$ $ $
1 1,000.00 7.00% 70.00 1,070.00
$ $ $
2 1,070.00 7.00% 74.90 1,144.90
$ $ $
3 1,144.90 7.00% 80.14 1,225.04
$ $ $
4 1,225.04 7.00% 85.75 1,310.80
$ $ $
5 1,310.80 7.00% 91.76 1,402.55
$ $ $
6 1,402.55 7.00% 98.18 1,500.73
$ $ $
7 1,500.73 7.00% 105.05 1,605.78
$ $ $
8 1,605.78 7.00% 112.40 1,718.19
$ $ $
9 1,718.19 7.00% 120.27 1,838.46
$ $ $
10 1,838.46 7.00% 128.69 1,967.15
$ $ $
11 1,967.15 7.00% 137.70 2,104.85
$ $ $
12 2,104.85 7.00% 147.34 2,252.19
$ $ $
13 2,252.19 7.00% 157.65 2,409.85
$ $ $
14 2,409.85 7.00% 168.69 2,578.53
$ $ $
15 2,578.53 7.00% 180.50 2,759.03
$ $ $
16 2,759.03 7.00% 193.13 2,952.16
$ $ $
17 2,952.16 7.00% 206.65 3,158.82
$ $ $
18 3,158.82 7.00% 221.12 3,379.93
$ $ $
19 3,379.93 7.00% 236.60 3,616.53
$ $ $
20 3,616.53 7.00% 253.16 3,869.68
Solution
In this transaction, I will make about $3,869.68 over the span of 20 years annually with 7%
interest.
Explanation:
The principal amount is plugged into B1, the interest rate is plugged into C1. B1 is then
multiplied with C1 to get the interest rate located in D1. By following A1 down the 20 years you
are able to get your ending balance.
7. You deposit $2000 in an account earning 3% interest compounded monthly.
a. How much will you have in the account in 20 years?
b. How much interest will you earn?
Excel:
Starting Interest Ending
Month Balance Rate Interest Balance
$ $ $
1 2,000.00 3.00% 60.00 2,060.00
$ $ $
2 2,060.00 3.00% 61.80 2,121.80
$ $ $
3 2,121.80 3.00% 63.65 2,185.45
$ $ $
4 2,185.45 3.00% 65.56 2,251.02
$ $ $
5 2,251.02 3.00% 67.53 2,318.55
$ $ $
6 2,318.55 3.00% 69.56 2,388.10
$ $ $
7 2,388.10 3.00% 71.64 2,459.75
$ $ $
8 2,459.75 3.00% 73.79 2,533.54
$ $ $
9 2,533.54 3.00% 76.01 2,609.55
$ $ $
10 2,609.55 3.00% 78.29 2,687.83
$ $ $
11 2,687.83 3.00% 80.63 2,768.47
12 $ 3.00% $ $
2,768.47 83.05 2,851.52
$ $ $
13 2,851.52 3.00% 85.55 2,937.07
$ $ $
14 2,937.07 3.00% 88.11 3,025.18
$ $ $
15 3,025.18 3.00% 90.76 3,115.93
$ $ $
16 3,115.93 3.00% 93.48 3,209.41
$ $ $
17 3,209.41 3.00% 96.28 3,305.70
$ $ $
18 3,305.70 3.00% 99.17 3,404.87
$ $ $
19 3,404.87 3.00% 102.15 3,507.01
$ $ $
20 3,507.01 3.00% 105.21 3,612.22
Solution
I will have about $3,612.22 in the account over the span of 20 years, and the interest earned in
the account will be about $1,612.22 over the 20 years. This interest is acquired by subtracting the
initial amount of $2000, from the amount in the account after the 20 years.
