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Monday, March 9, 2009

Interest rate compounded continuous

Question
If you invest $6,700 in an account paying 8.5% compounded continuously, how much money will be in the account at the end of 4.5 years?



Solution
Solution 1
Investment (1 + interest rate)time
$6,700 (1.085)4.5
$6,700 (1.44356)
$9,671.83



Solution 2

 





































YearInvestmentInterestBalance
1$6,700.00$569.501$7,269.50
2$7,269.50$617.91$7,887.41
3$7,887.41$670.23$8,557.64
4$8,557.64$727.40$9,279.04
4.5$9,279.04$394.36$9,673.40


NOTE: The difference in the final answers are due to rounding off.
Please do not forget to leave a feedback in Allexperts.com AND a comment in this blog. ALSO, if you want a copy of the Excel file for the above table, please say so in a comment in this post.
Posted by An aspiring millionaire at 6:57 AM
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1 comment:

  1. An aspiring millionaireMarch 9, 2009 at 8:35 PM

    Feedback from the student who asked this questions:
    knowledgeability - 10
    clarity of response - 10
    timeliness - 7
    politeness - 10
    Comment - I appreciate your answer and response. I like the excel table created as well. I just wish that it didnt take the full three days to get to me. I know this is not your job and is volunteer only, so I truely do appreciate your help. Thank You!!:)

    ReplyDelete

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