Ron Larson
Browse the Topics, Table of Contents, and Index
Follow us:
Twitter Facebook

6.4 Savings & Retirement Plans

6.4 Savings & Retirement Plans
<
>
  • 1. Savings Account

    You deposit $1000 into a savings account. The savings account earns 5%, compounded monthly. Find the balance in the account after each time period. (See Example 1.)

    1. 10 years
    2. 20 years
    • Worked-Out Solution

      Use the formula for compound interest.

    Comments (0)

    These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.
    When posting a comment, you agree to our Terms of Use.

      _  __     ___     _    _     _____     _  __  
 | |/ //   / _ \\  | || | ||  |  ___||  | |/ // 
 | ' //   / //\ \\ | || | ||  | ||__    | ' //  
 | . \\  |  ___  ||| \\_/ ||  | ||__    | . \\  
 |_|\_\\ |_||  |_|| \____//   |_____||  |_|\_\\ 
 `-` --` `-`   `-`   `---`    `-----`   `-` --`
    Showing 0 comments
    Subscribe by RSS
    There are no comments.
  • 2. Savings Account

    Suppose that you deposit $1000 into a savings account. The savings account earns 6%, compounded monthly. Find the balance in the account after each time period. (See Example 1.)

    1. 10 years
    2. 20 years
    Comments (0)

    These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.
    When posting a comment, you agree to our Terms of Use.

                 ___      ______    ______    _____   
  ____      / _ \\   /_   _//  /_   _//  /  ___|| 
 |    \\   | / \ ||    | ||     -| ||-  | // __   
 | [] ||   | \_/ ||   _| ||     _| ||_  | \\_\ || 
 |  __//    \___//   /__//     /_____//  \____//  
 |_|`-`     `---`    `--`      `-----`    `---`   
 `-`
    Showing 0 comments
    Subscribe by RSS
    There are no comments.
  • 3. Savings Account

    You deposit $1000 into a savings account. The savings account earns 5.5%, compounded monthly. Your friend deposits $700 into a savings account that earns 7.5%, compounded monthly. Which account has the greater balance after 15 years? (See Example 1.)

    • Worked-Out Solution

      Use the formula for compound interest.

      Your Account:

      Your Friend's Account:

      Your account has a greater balance after 15 years.

    Comments (0)

    These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.
    When posting a comment, you agree to our Terms of Use.

      _____    _    _     _____     _____     _____   
 /  ___|| | || | ||  / ____||  |  ___||  / ____|| 
| // __   | || | || / //---`'  | ||__   / //---`' 
| \\_\ || | \\_/ || \ \\___    | ||__   \ \\___   
 \____//   \____//   \_____||  |_____||  \_____|| 
  `---`     `---`     `----`   `-----`    `----`
    Showing 0 comments
    Subscribe by RSS
    There are no comments.
  • 4. Savings Account

    Suppose that you deposit $1000 into a savings account. The savings account earns 6.5%, compounded monthly. Your friend deposits $600 into a savings account that earns 8%, compounded monthly. Which account has the greater balance after 40 years? (See Example 1.)

    Comments (0)

    These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.
    When posting a comment, you agree to our Terms of Use.

      _____    __   __   ______    _    _      _____  
 /  ___||  \ \\/ // |      \\ | || | ||   / ___// 
| // __     \ ` //  |  --  // | || | ||   \___ \\ 
| \\_\ ||    | ||   |  --  \\ | \\_/ ||   /    // 
 \____//     |_||   |______//  \____//   /____//  
  `---`      `-`'   `------`    `---`   `-----`
    Showing 0 comments
    Subscribe by RSS
    There are no comments.
  • 5. Purchase of Manhattan

    According to legend, in 1626, Peter Minuit purchased Manhattan Island from Native Americans for $24 worth of trade goods. Suppose the $24 had been deposited into a savings account earning 7%, compounded annually. How much would be in the account in 2014? (See Example 2.)

    • Worked-Out Solution

      From 1626 to 2014 is 388 years. Use the formula for compound interest.

      So, about $6 trillion would be in the account in 2014.

    Comments (0)

    These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.
    When posting a comment, you agree to our Terms of Use.

      ______     ___     __   __    _____    __   _   
 /_   _//   / _ \\   \ \\/ //  |  ___|| | || | || 
   | ||    | / \ ||   \   //   | ||__   | '--' || 
  _| ||    | \_/ ||   / . \\   | ||__   | .--. || 
 /__//      \___//   /_//\_\\  |_____|| |_|| |_|| 
 `--`       `---`    `-`  --`  `-----`  `-`  `-`
    Showing 0 comments
    Subscribe by RSS
    There are no comments.
  • 6. Gift for the Future

    You deposit $3000 into a savings account that earns 5%, compounded annually, for future generations of your family. How much will be in the account after 200 years? (See Example 2.)

    Comments (0)

    These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.
    When posting a comment, you agree to our Terms of Use.

     _    _     _____     ____      ______    _  _   
| |  | ||  |  ___||  |  _ \\   /_   _//  | \| || 
| |/\| ||  | ||__    | |_| ||   -| ||-   |  ' || 
|  /\  ||  | ||__    | .  //    _| ||_   | .  || 
|_// \_||  |_____||  |_|\_\\   /_____//  |_|\_|| 
`-`   `-`  `-----`   `-` --`   `-----`   `-` -`
    Showing 0 comments
    Subscribe by RSS
    There are no comments.
  • 7. Investment by an Ancestor

    Suppose that 350 years ago, 1 of your ancestors deposited $1 into a savings account earning 6%, compounded annually. How much would be in the savings account today? (See Example 2.)

    • Worked-Out Solution

      Use the formula for compound interest.

      How is that possible? The point is that 6% annual interest is a high rate, especially during the past 350 years. During the first 250 of those years, the rate of inflation was low.

    Comments (0)

    These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.
    When posting a comment, you agree to our Terms of Use.

     ______      ___     __   __    ______   ______   
|      \\   / _ \\   \ \\/ //  /_   _// |      \\ 
|  --  //  / //\ \\   \   //    -| ||-  |  --  // 
|  --  \\ |  ___  ||  / . \\    _| ||_  |  --  \\ 
|______// |_||  |_|| /_//\_\\  /_____// |______// 
`------`  `-`   `-`  `-`  --`  `-----`  `------`
    Showing 0 comments
    Subscribe by RSS
    There are no comments.
  • 8. Compounding a Penny

    Suppose that 500 years ago, the equivalent of 1 penny had been deposited into a savings account earning 8%, compounded annually. How much would be in the savings account today? (See Example 2.)

    Comments (0)

    These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.
    When posting a comment, you agree to our Terms of Use.

    __    __   __   __   _    _      ___    __    __  
\ \\ / //  \ \\/ // | \  / ||   / _ \\  \ \\ / // 
 \ \/ //    \ ` //  |  \/  ||  / //\ \\  \ \/ //  
  \  //      | ||   | .  . || |  ___  ||  \  //   
   \//       |_||   |_|\/|_|| |_||  |_||   \//    
    `        `-`'   `-`  `-`  `-`   `-`     `
    Showing 0 comments
    Subscribe by RSS
    There are no comments.
©Larson Texts, Inc. All Rights Reserved.