SOLUTION: If 46800 dollars is invested at an interest rate of 6 percent per year, find the value of the investment at the end of 5 years for the following compounding methods, to the nearest

Algebra ->  Expressions-with-variables -> SOLUTION: If 46800 dollars is invested at an interest rate of 6 percent per year, find the value of the investment at the end of 5 years for the following compounding methods, to the nearest      Log On


   

Question 1137331: If 46800 dollars is invested at an interest rate of 6 percent per year, find the value of the investment at the end of 5 years for the following compounding methods, to the nearest cent?
(a) Annual: $
(b) Semiannual: $
c) Monthly: $
(d) Daily: $
Found 2 solutions by VFBundy, ikleyn:
Answer by VFBundy(438) About Me  (Show Source):
You can put this solution on YOUR website!
Total+=+P%281+%2B+r%2Fn%29%5Ent

(a) Annual: $
Total+=+46800%281+%2B+0.06%2F1%29%5E%281%2A5%29 = $62,628.96
(b) Semiannual: $
Total+=+46800%281+%2B+0.06%2F2%29%5E%282%2A5%29 = $62,895.29
(c) Monthly: $
Total+=+46800%281+%2B+0.06%2F12%29%5E%2812%2A5%29 = $63,126.19
(d) Daily: $
Total+=+46800%281+%2B+0.06%2F365%29%5E%28365%2A5%29 = $63,171.83

There is also a constant interest formula:
Total+=+P%28e%5Ert%29 = Total+=+46800%28e%5E%280.06%2A5%29%29 = $63,171.43

Answer by ikleyn(53763) About Me  (Show Source):
You can put this solution on YOUR website!
.

The post by @VFBundy looks strange,  because his answer for constant interest formula is lower than daily interest.

It is not correct,  and the correct answer for constant interest should be  (slightly)  more than for daily interest.

The cause is in using too few significant digits in the number  " e ".

My answer for the constant interest is  $63173.38,  when I use  e = 2.71828.


My notice is not to nitpick, but to restore the right order of values in the answer.

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One more notice:  the correct name for the  "constant interest rate"  in this context is the  "continuous interest".