Problema Solution
d. Compound interest-If $1 had been invested on July 4, 1776, at 5% interest, compounded annually, what would it be worth on July 4, 2076?
Answer provided by our tutors
step1 =Formula for calculating compound interest:
Where,
A = final amount
P = principal amount (initial investment)
r = annual nominal interest rate (as a decimal)
n = number of times the interest is compounded per year
t = number of year
step2
given P= $1
r= 5%
t=300 years
n= 1 (annuly)
step2
A= 1(1+ 0.05)^300
A= $ 2273996.129