Solved: Compound Interest: Suppose a certain amount of

Chapter 5, Problem 38E

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Problem 38E

Compound Interest: Suppose a certain amount of money is deposited in an account paying 3% annual interest compounded monthly. For each positive integer n, let Sn = the amount on deposit at the end of the nth month, and let S0 be the initial amount deposited.

a. Find a recurrence relation for S0, S1, S2, ..., assuming no additional deposits or withdrawals during the year.

b. If S0 = $10,000, find the amount of money on deposit at the end of one year.

c. Find the APR for the account

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