Home > APCALC > Chapter 6 > Lesson 6.4.2 > Problem6-140

6-140.

The Business Section of the Metropolis Express lists Megabux Bank as paying $4.95\%$ interest, compounded daily, on a minimum $10,000$ deposit, for a “yield” (or overall gain) of $5.07\%$.

1. Compute how much an initial $10,000$ deposit will be worth after one year at Megabux Bank.

$\text{yield}=\text{initial investment}\left ( 1+\frac{\text{interest rate}}{\text{times compounded per year}} \right )^{\text{times-compounded}}$

2. Confirm the $5.07\%$ “yield.”

Refer to the hint in part (a).

3. When will the initial $10,000$ deposit be worth $15,000$?

$15,000=10,000(1.057)^t$