1 Suppose that 1000 is deposited into an account that pays 5

1

Suppose that $1000 is deposited into an account that pays 5% interest per year. at the end of each year, th amount in the account is 1.05 times the amount at the beginning of the year. write a MATLAB program with a for loop to calculate the amount in the account after 10, 20, and 30 years.

2

Repeat problem 1, assuming that the interest is compounded quarterly; that is, one-fourth of the annual interest (1.25%) is added to the account every three months. Also, repeat the problem with monthly compounding.

3

For the account described in Problem 1, write a MATLAB program with a while loop to determine the number of years required for the amount in the account to reach $5,000.

Solution

1.

in going from any year to the next,

the Balance will change by having 5% of it added to itself, i.e., new Balance = current Balance + (0.05)(current Balance) = (1.08)(current balance)

after 10 years

MATLAB code

Balance = 1000; %initialize Balance

for year = 1:10

Balance = (1.05)*Balance;

end

Balance %This will display the final Balance

for 20 years

MATLAB code

Balance = 1000; %initialize Balance

for year = 1:20

Balance = (1.05)*Balance;

end

Balance %This will display the final Balance

for 30 years:

MATLAB code

Balance = 1000; %initialize Balance

for year = 1:30

Balance = (1.05)*Balance;

end

Balance %This will display the final Balance