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Compound Interest

# Asmincreaseswithoutbound 11mmapproachese

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Unformatted text preview: o that he’ll have \$4000 at the end of two years? A = P(1 + r/n)nt let m = n/r, then A = P(1 + 1/m)mrt = P[(1 + 1/m)m]rt look familiar? As n, the number of times per year that interest is compounded, increases without bound m increases without bound. as m increases without bound (1 + 1/m)m approaches e Compound interest formula (compounded continuously) A = Pe rt 4) Ex: A total of \$12,000 is invested at an annual percentage rate of 9%. Find the balance after 5 years if the interest is compounded continuously. 5) A sum of \$9000 is invested at an annual percentage rate of 8.5%. Find the balance in the account after 3 years if a) interest is compounded annually b) inte...
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