Compound Interest

1. Find the principal \(P\) that will generate the future value, \(A= $12,000\) at 8% compounded annually for \(10\) years?  solution

2. Find the principal \(P\) that will generate the future value, \(A= $8,000\) at 10% compounded monthly for \(10\) years?  solution

3. How much should a father invest at the time his daughter is born in order to provide her with \($40,000\) at age \( 18 \)? Assume that the interest is 5% compounded quarterly.  solution

4. Which of the two rates would yield the larger amount in 1 year:  8% compounded semiannually or 7.8% compounded daily? (Hint: Start with a principal of \($1,000\) in each instance.)  solution