SOLUTION: The problem is a word problem it goes like this... You invest 2,000 dollars at an annual interest rate of 5% for 3 years. Find the amount for each account... Compounded dail

Algebra ->  Exponential-and-logarithmic-functions -> SOLUTION: The problem is a word problem it goes like this... You invest 2,000 dollars at an annual interest rate of 5% for 3 years. Find the amount for each account... Compounded dail      Log On


   

Question 34711: The problem is a word problem it goes like this...
You invest 2,000 dollars at an annual interest rate of 5% for 3 years.
Find the amount for each account...
Compounded daily = ?
Compounded monthly = ?
Compounded continuously = ?

Answer by stanbon(75887) About Me  (Show Source):
You can put this solution on YOUR website!
Value = (amount at the beginning)(1+r/n)^(nt)
r is the yearly rate of interest
n is the number of times in a year the money is compounded
t is the number of years this compounding goes on
A=2000(1+0.05/365)^(365*3)
A=2000(1.000136986...)^1095
A=$2323.64 (value after 3 yrs. compounded daily at 5% per annum)
I'll let you do the monthly where n=12
For "continuous" compounding the formula changes to:
V = Amount* e^(rt)
V = 2000 e^(0.05*3)
V= 2000(1.161834...
v=$2323.67
Cheers,
Stan H.
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