Find the future value and interest earned if​$8906.54is

Answered question

2022-04-02

Find the future value and interest earned if

​$8906.54

is invested for

8

years at

4​%

compounded ​(a) semiannually and ​(b) continuously.

Answer & Explanation

star233

star233

Skilled2022-04-20Added 403 answers

(a)  Compounded Semi-annually

A=P(1+r/t)nt

A = final amount

P = initial principal

r = interest rate

n = number of times the interest is applied per time period

t = number of time periods elapsed

number of time periods is 18-8  = 10

semiannual 2 makes n = 2

A = 0

P = 8906.54

r  = 0.04

n = 2

t  = 2

A=P(1+r/t)nt

=8906.54(1+0.04/2)2×10

=8906.54(1.02)20

= 13234.65

(b)  continuously

A=P(ert)

=8906.54(e0.04×10)               e=2.7183

= $13287.1


 

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