Problema Solution
Find the future value and interest earned if $56,780 is invested at 2.3% compound a.)quarterly for 23 quarter b.)continuously for 15 yrs.
Answer provided by our tutors
P = $56,780 the principal or present value
r = 0.023 or 2.3% annual interest rate
a)
m = 4 compounding periods per year (since the compounding is made quarterly)
i = r/m = 0.023/4 interest rate per period
n = 23 quarters (total number of compounding periods)
A = the future value
A = P(1 + i)^n
A = 56780(1 + 0.023/4)^23
A = $64,783.79
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b)
A = the future value
e = 2.71828183
A = P*e^(rt)
A = 56780*2.71828183^(0.023*15)
A = $80,172.79
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