SOLUTION: Hello, can you please help me with this. I have no idea of the steps I need to solve this. Thanks so much! 4. You have $760,000 in your bank account. The interest rate in yo

Question 174245: Hello, can you please help me with this. I have no idea of the steps I need to solve this. Thanks so much!
4. You have $760,000 in your bank account. The interest rate in your account is 5%. Solve for the following:
a. How much interest will you accumulate if interest is compounded annually over the next five years?
b. How much interest will you earn in your account over the next five years with continuous compounding? You can use a scientific calculator or the =Exp() function in Microsoft Excel.
Answer by solver91311(24713) (Show Source): You can put this solution on YOUR website!
For annual compounding:

where P is the principal amount, r is the interest rate per compounding period expressed as a decimal, and n is the number of compounding periods.

For your example:

You can just use your calculator, or type the following into a cell on a spreadsheet:

=760000*1.05^5

For continuous compounding:

, where P is the principal, e is the base of the natural logarithms, r is the annual rate, and t is the number of years.

Again, use your calculator or type the following into a cell on a spreadsheet:

=760000*exp(.05*5)

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