Mike gioulis would like to have $25,000 in 4 years to pay off a balloon payment on his business mortgage. His money market account is paying 1.825% compounded daily Disregarding leap years, how much money must Mike put in his account now to achieve his goal? round to the nearest whole dollar

Question

Jayden Herrera

Mathematics

22 May, 04:05

Mike gioulis would like to have $25,000 in 4 years to pay off a balloon payment on his business mortgage. His money market account is paying 1.825% compounded daily Disregarding leap years, how much money must Mike put in his account now to achieve his goal? round to the nearest whole dollar

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Lilliana Rosales · Answer 1

You can do it using daily or continuous compounding

daily interest =.01825/365

= 5 * 10^-5

number of periods = 365 * 4 = 1460

1 + 5*10^-5 = 1.00005

1.00005^1460 = 1.07573

1.07573 x = 25,000

x = 23,240

if continuous

a = p e^rt

a = p e^ (5*10^-5*1460)

a = p e^ (.073)

a = p (1.07573)