Question

Continuous compound interest and compound interest​

Answer 1

Answer:

Correct to 3 decimal places

Step-by-step explanation:

Answer 2

Compound interest is calculated by multiplying the initial principal amount by one plus the annual interest rate raised to the number of compound periods minus one.

Example:

An amount of $1,500.00 is deposited in a bank paying an annual interest rate of 4.3%, compounded quarterly. What is the balance after 6 years?

Solution:

Using the compound interest formula, we have that

P = 1500, r = 4.3/100 = 0.043, n = 4, t = 6. Therefore,

Example Solution

So, the balance after 6 years is approximately $1,938.84.