SOLUTION: An initial deposit of $36,000 grows at an annual rate of 8% for 24 years. Compare the final balances resulting from continuous compounding and annual compounding. (Round your answe

Question 891012: An initial deposit of $36,000 grows at an annual rate of 8% for 24 years. Compare the final balances resulting from continuous compounding and annual compounding. (Round your answers to the nearest cent.)
from continuous compounding=???
from annual compounding=???
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
formula for continuous compounding is f = p * e^(i*n)
i is the interest rate per time period.
n is the number of time periods.

formula for annual compounding is f = p * (1+i)^n
i is the interest rated per time period.
n is the number of time periods.

time period is in years.
i = .08 per year.
n = 24 years.

your continuous compounding formula becomes:

f = 36,000 * e^(.08*24) which results in f = 245,554.5049

your annual compounding formula becomes:

f = 36,000 * (1.08)^24 which results in f = 228,282.5065

you may round the answer to the nearest cent as required.

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