Question

If you invest $10,427.00 into ancaring an annual nominal interest rate of 4.502%, how much will you have in your account after 11 years if the interest is compounded quarterly? If the interest is compounded continuously?Help solve B If interest is compounded continuously: FV= ___

Answer 1

The continuous compounding formula is given to be:

$A=Pe^{rt}$

where

P = the initial amount

A = the final amount

r = the rate of interest

t = time

e is a mathematical constant where e ≈ 2.7183.

From the question, we have the following parameters:

$\begin{gathered} P=10,427 \\ r=\frac{4.502}{100}=0.04502 \\ t=11 \end{gathered}$

Inputting these values into the formula, we have:

$\begin{gathered} A=10427e^{0.04502\times11} \\ A= 17,109.24 \end{gathered}$

Therefore, the final value when compounded continuously is $17,109.24.