Continuous compounding examine - enjoy I solved it correctly? I suppose my total property is 2100?
Take the current amount you enjoy contained by your checking or stash justification. Suppose you enjoy a choice of keeping your money for five years in a stash tale next to a 2% interest rate, or in a five year licence of deposit next to and interest rate of 4.5%. Calculate how much interest you would earn next to respectively pick over five years time next to continuous compounding.
A = Ce^RT My total money in the wall is 2100 dollars contained by round information. Since the formula for the continuous compounding is A=Ce^RT where on earth C is the initial deposit or property, T for time, R is the rate of interest and A will be the final amount.
Capital = 2100, Interest Rate ( R) = 2% Time (T) = 5 years, e = 2.7182818284
When money kept for five years in a stash tale next to a 2% interest rate:
By using the values into formula:= 2100 e ^(0.02*5) = 2318.57
Interest earn = 2318.57 – 2100 = 218.57 dollars
Five year qualification of deposit beside interest rate of 4.5%.So A = Ce^RT 2100e^4.5*5=2680.19 - 2100=$516.98
Answers:
The possession 'Continuous Compounding' is not one I enjoy come across previously ..
In this context, I am going to assume in ability 'Interest rewarded Daily' ... i.e. at the extremity of respectively time, interest is added to the explanation .. and thus, on the subsequent morning, you go and get 'interest on the interest' .. and so on..
The formula does not appear to be moderately right .. the product RT is plainly impossible to tell apart irrespective of when the interest is compensated
For example, if you hold 2% interest salaried annually for 5 years RT = .1 . and after 5 years you own 2318.57 (as per your calculation)
On the other paw, if you hold 2/12 = .01666r % Interest salaried monthly for 5x12 = 60 months, RT is still .1 .. BUT if you ACTUALLY spreadsheet this shield for 60 months, you expiration up near 2320.67
If you do it for 1821 days (I've included 1 leap year), you pause up beside 2320.98 ...
Yes you hold.
Give yourself 10 points
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A = Ce^RT My total money in the wall is 2100 dollars contained by round information. Since the formula for the continuous compounding is A=Ce^RT where on earth C is the initial deposit or property, T for time, R is the rate of interest and A will be the final amount.
Capital = 2100, Interest Rate ( R) = 2% Time (T) = 5 years, e = 2.7182818284
When money kept for five years in a stash tale next to a 2% interest rate:
By using the values into formula:= 2100 e ^(0.02*5) = 2318.57
Interest earn = 2318.57 – 2100 = 218.57 dollars
Five year qualification of deposit beside interest rate of 4.5%.So A = Ce^RT 2100e^4.5*5=2680.19 - 2100=$516.98
Answers:
The possession 'Continuous Compounding' is not one I enjoy come across previously ..
In this context, I am going to assume in ability 'Interest rewarded Daily' ... i.e. at the extremity of respectively time, interest is added to the explanation .. and thus, on the subsequent morning, you go and get 'interest on the interest' .. and so on..
The formula does not appear to be moderately right .. the product RT is plainly impossible to tell apart irrespective of when the interest is compensated
For example, if you hold 2% interest salaried annually for 5 years RT = .1 . and after 5 years you own 2318.57 (as per your calculation)
On the other paw, if you hold 2/12 = .01666r % Interest salaried monthly for 5x12 = 60 months, RT is still .1 .. BUT if you ACTUALLY spreadsheet this shield for 60 months, you expiration up near 2320.67
If you do it for 1821 days (I've included 1 leap year), you pause up beside 2320.98 ...
Yes you hold.
Give yourself 10 points