Interest Rates and Compounding Frequency
MA240 Assignment 4- Financial Report Worksheet
To complete this project you will:
Complete a 2-page, double-spaced, APA-formatted report. In the report, you need to present your findings and explain your conclusions on interest rates and compounding frequency. Thoughts to include in the report include: Is a savings account a good way to earn interest? When looking at opening a savings account, what should you look for: higher interest rate or more frequent compounding?
Be sure to cite your sources for the interest rates from the chosen financial institution! Be sure to show all work!
Directions: Complete the financial report worksheet to help you with your calculations to create the APA report.
1. Go to your financial institutions website or a local financial institution website and find the interest rate and compounding frequency (monthly, quarterly, annually, etc) for a savings account. Record that here:
2. Use the compound interest formula: A=P(1+r/n)^nt where r is the rate as a decimal, n is the number of times it is compounded in the time frame, t is the amount of time and P is the starting value. Calculate your balance if you invest $1,000 for 1 year.
3. Using the compound interest formula Calculate your balance if you invest $1,000 for 5 years.
4. Now select a new compounding period (monthly, quarterly, annually, etc) and redo your calculations from number 2 & 3.
5. Now select a new interest rate from another financial institution that is different than your starting one. Redo your calculations from number 2 & 3 with the new rate but keeping the same frequency it is compounded.
6. What did you learn about comparing the compounding frequency that interest is compounded?
7. What did you learn about comparing the interest rate?
8. Is it better to have a slightly higher rate or have interest compounded more often?
Assignment 4- Financial Report Worksheet
Name
MA 240 College Algebra School
Ashworth College
Date
MA240 Assignment 4- Financial Report WorksheetTo complete this project you will:Complete a 2-page, double-spaced, APA-formatted report. In the report, you need to present your findings and explain your conclusions on interest rates and compounding frequency. Thoughts to include in the report include: Is a savings account a good way to earn interest? When looking at opening a savings account, what should you look for: higher interest rate or more frequent compounding?Be sure to cite your sources for the interest rates from the chosen financial institution! Be sure to show all work!
Directions: Complete the financial report worksheet to help you with your calculations to create the APA report. 1. Go to your financial institutions website or a local financial institution website and find the interest rate and compounding frequency (monthly, quarterly, annually, etc) for a savings account. Record that here:
Bank
Account APY
Min Balance
Citi
0.70%
$500
Source: /citi-accelerate-savings-account2. Use the compound interest formula: A=P1+rnnt where r is the rate as a decimal, n is the number of times it is compounded in the time frame, t is the amount of time and P is the starting value. Calculate your balance if you invest $1,000 for 1 year. A=P1+0.00711 = $ 1,007
3. Using the compound interest formula Calculate your balance if you invest $1,000 for 5 years. A=P1+0.00715 = $ 1,035.49
4. Now select a new compounding period (monthly, quarterly, annually, etc) and redo your calculations from number 2&3.
Bank
Semi annual
Min Balance
Citi
0.35%
0
After 1 year
A=P1+0.007022= $ 1,007.0123
After 5 years
A=P1+0.007022*5 = $ 1,035.56
5. Now select a new interest rate from another financial institution that is different than your starting one. Redo your calculations from number 2&3 with the new r...