Question

Compounded Continuously 1. How much money will be in the account after 5 years if $2030 is deposited at 4% compounded continuously? 2. Determine the amount of interest earned in 5 years if $2030 is deposited at 4% compounded continuously? 3. Inflation is running at 0.8% per month when you deposit $3000 in an account earning 6% compounded continuously. In constant dollars, how much will you have 2 years from now? 4. Find the present value of $12,075 if money was invested at 7.2% compounded continuously for 8 years, 9 months. 5. Determine the population in 10 years if the city has a population of 25,010. The growth rate is predicted at 3%.

Answer 1

Continous compounding formula in Amount A=Pv x { 1 + 1 jat. This formula changes as napproaches to infinity Where PV: present value of investimet if the standand interest rate to the time in year & is A = Pux e 1. given pu= 8030 i= 4% t = 5 0.04x5 1 - 2 oc 0 Xe - 9o 30 x e A: 2030 x 1.2914 = 2,47946 A ~ 294 79$ pv New amount A d. interest - The amount of of • The amount 94.79 - 2030 = 449 0.072 07) A - 12075 e for h. 8 year 6 months 8 + 1 = 17 0.612 512075 @ 62 =(12015) (108441) A - Q2, 267.50 $

5. population after growth A=P(ltrit 25,010 (1+30).) =(5,010) 1 +0.03) =(5,010)(1-03) - (25,010) (1-3439) - 33,6 11.34 o ~ 33,611