Use the compound interest formulas A = P (1+ r/n)^nt and A =Pe^rt...

Question

Use the compound interest formulas A = P (1+ r/n)^nt and A =Pe^rt to solve exercises 53-56. Round answers to the nearest cent. 
Find the accumulated value of an investment of $10,000 for 5 years at an interest rate
of 1.32% if the money is
a. compounded semiannually;
b. compounded quarterly;
c. compounded monthly;
d. compounded continuously.

Accepted Answer

Hey everyone here we are asked to use the compound interest formula which is A. Is equal to p times E. To the power of R. T. To solve the problem. So all we have to do is find the value of each of these variables. Except for A. Because that is our rich turn value. So we're just finding P. R. And T. So we're first told that we are going to deposit $8000. So 8000 is going to be our initial value. Our principal value. So P. Is equal to 8000. Next we want to find our which is our interest rate. And we are told that our interest rate is 1.18%. So r. is equal to 1.18%. But we want to in decimal notation so 1.18% is simply 0.0118. And it is also compounded continuously which is also implied by the given formula. And next we are asked to find the value after 10 years while tea is simply time in years. So T. Is just 10. And now we can just input this information into our formula to to find our return amount. So A. Is equal to P. Which is 8000 times E. To the power of R. Which is 0.118 Times T. Which is 10. And if you plug it in your calculator you will find the answer of $9001.95 which is answer choice B. Thanks for watching. I hope you found this video helpful and I'll see you again next time.

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