Question 759702: Use the compound formula A=Pe^rt
To solve the problem given. Round answers to the nearest cent.
Find the accumulated value of an investment of $20,000 for 4 years at an interst rate of 4.5% if the money is
a. Compounded semi=annually ___(Round to the nearest cent)
b. What is the accumulated value if the money is compounded monthly? ___(Round to the nearest cent)
c. What is the accumulated value if the money is compounded continuously?
Answer by lwsshak3(11628)   (Show Source):
You can put this solution on YOUR website! Use the compound formula A=Pe^rt
To solve the problem given. Round answers to the nearest cent.
Find the accumulated value of an investment of $20,000 for 4 years at an interst rate of 4.5% if the money is
a. Compounded semi=annually ___(Round to the nearest cent)
b. What is the accumulated value if the money is compounded monthly? ___(Round to the nearest cent)
c. What is the accumulated value if the money is compounded continuously?
***
Compound Interest formula for fixed periods: A=P(1+i)^n, P=initial investment, i=interest rate per period, n=number of periods, A=amount after n periods.
..
Formula for continuous compounding: A=Pe^rt, P=initial investment, r=annual interest rate, t=number of years, A=amount after t years
..
a. Compounded semi=annually
P=$20000
i=.045/2=0.0225
n=4*2=8
A=20000(1+0.0225)^8
A=20000(1.0225)^8=$23,896.62
..
b. Compounded monthly
P=$20000
i=.045/12=0.00375
n=4*12=48
A=20000(1+0.00375)^48
A=20000(1.00375)^48=$23,936.29
..
c. Continuous compounding:
P=$20000
r=.045
n=4
A=20000*e^(.045*4)
A=20000*e^0.18=$23944.35
|
|
|
