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Rugtugba

If you deposit $1,000 in an account that pays 6% annual interest compounded continuously, what will the balance be after five years?

  • one year ago
  • one year ago

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  1. Kuoministers
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    any idea how to formulate a equation for that?

    • one year ago
  2. Rugtugba
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    no :/ cantremember

    • one year ago
  3. Mertsj
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    I believe the formula is \[A = Pe ^{rt}\]

    • one year ago
  4. Kuoministers
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    Conpound interest can be calculated using the formula

    • one year ago
  5. Kuoministers
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    • one year ago
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  6. Kuoministers
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    P = principal amount (the initial amount you borrow or deposit) r = annual rate of interest (as a decimal) t = number of years the amount is deposited or borrowed for. A = amount of money accumulated after n years, including interest. n = number of times the interest is compounded per year

    • one year ago
  7. Kuoministers
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    remember your interest compounds annually(every year)

    • one year ago
  8. Mertsj
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    @Kuoministers That is indeed the formula for compound interest where you have a finite number of compounding periods. However, in this problem, the interest is compounded continuously. So the formula I posted is the one to use and I am afraid you are confusing the asker. Why don't you google "interest formula compounded continuously"?

    • one year ago
  9. MariaB2014
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    @Mertsj is right .

    • one year ago
  10. Kuoministers
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    ah yes my bad @mertsj :)

    • one year ago
  11. Kuoministers
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    but it still would work if you used the formula that i had?

    • one year ago
  12. Mertsj
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    So Rugtugba, now that we have cleared the chatter, are you ready to continue?

    • one year ago
  13. Rugtugba
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    yes

    • one year ago
  14. Mertsj
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    @Kuoministers What would you use for n?

    • one year ago
  15. Kuoministers
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    1 since its compounded yearly

    • one year ago
  16. Mertsj
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    Plug into the formula. The initial amount A is Ok. Let me deal with the cat first.

    • one year ago
  17. Rugtugba
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    lol

    • one year ago
  18. Mertsj
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    @Kuoministers So compounded continuously means annually? I thought compounded annually meant compounded annually. Silly me!!

    • one year ago
  19. Mertsj
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    Good luck, Rugtugba. We have way too many cooks in this kitchen.

    • one year ago
  20. tkhunny
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    @Kuoministers the continuous forumla is the limiting form of the finite form you have posted. Your calculus will have to be up to speed to prove it. You can explore it on your own by calculating the finite formula multiple times, each with an increasing value of n.

    • one year ago
  21. Rugtugba
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    its alright guys i found it its 1349.60 thanks anyways

    • one year ago
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