SOLUTION: If you deposit $1,000 into your bank account, how much will be in the account: A) After 5 years with 6% annual interest compounded quarterly? B) After 3 years with 4% annual inte

Question 1102728: If you deposit $1,000 into your bank account, how much will be in the account:
A) After 5 years with 6% annual interest compounded quarterly?
B) After 3 years with 4% annual interest compounded monthly?
C) After 6 years with 5% annual interest compounded continuously?
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Answer by htmentor(1343) (Show Source): You can put this solution on YOUR website!
The formula for computing compound interest is:
A = P(1 + r/n)^(rt), where A = the accumulated amount, P = the initial principal, r = the annual rate,
n = the number of times the interest is compounded per year, and t = the number of years.
In all cases P = 1000
A) In this case, r = 0.06, n = 4, and t = 5
Putting in the numbers, we get A = $1346.86
B) r = 0.04, n = 12, t = 3 -> A = $1127.27
C) For continuous compounding, the formula is A = P*e^(rt)
This gives A = 1000*e^(0.05*6) = $1349.86

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