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Rugtugba

  • 2 years ago

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

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  1. Kuoministers
    • 2 years ago
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    any idea how to formulate a equation for that?

  2. Rugtugba
    • 2 years ago
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    no :/ cantremember

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

  4. Kuoministers
    • 2 years ago
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    Conpound interest can be calculated using the formula

  5. Kuoministers
    • 2 years ago
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  6. Kuoministers
    • 2 years ago
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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

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

  8. Mertsj
    • 2 years ago
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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"?

  9. MariaB2014
    • 2 years ago
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    @Mertsj is right .

  10. Kuoministers
    • 2 years ago
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    ah yes my bad @mertsj :)

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

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

  13. Rugtugba
    • 2 years ago
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    yes

  14. Mertsj
    • 2 years ago
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    @Kuoministers What would you use for n?

  15. Kuoministers
    • 2 years ago
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    1 since its compounded yearly

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

  17. Rugtugba
    • 2 years ago
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    lol

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

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

  20. tkhunny
    • 2 years ago
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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.

  21. Rugtugba
    • 2 years ago
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    its alright guys i found it its 1349.60 thanks anyways

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