Question

Compare the balance after 10 years of a $5000 investment earning 8.5% interest compounded continuously to the same investment compounded quarterly.
(Show the work)

Answer 1

Ex2:Suppose that $5000 is deposited in a saving account at the rate of 6% per year. Find the total amount on deposit at the end of 4 years if the interest is: P =$5000, r = 6% , t = 4 years a) simple : A = P(1+rt) A = 5000(1+(0.06)(4)) = 5000(1.24) = $6200 b) compounded annually, n = 1:
A = 5000(1 + 0.06/1)(1)(4) = 5000(1.06)(4) = $6312.38 c) compounded semiannually, n =2: A = 5000(1 + 0.06/2)(2)(4) = 5000(1.03)(8) = $6333.85 d) compounded quarterly, n = 4: A = 5000(1 + 0.06/4)(4)(4) = 5000(1.015)(16) = $6344.93 e) compounded monthly, n =12: A = 5000(1 + 0.06/12)(12)(4) = 5000(1.005)(48) = $6352.44

f) compounded daily, n =365: A = 5000(1 + 0.06/365)(365)(4) = 5000(1.00016)(1460) = $6356.12

hope I helped.......................:)

Answer 2

Compounded continuously
5,000×e^(0.085×10)=11,698.23

Compounded quarterly
5,000×(1+0.085÷4)^(10×4)=11,594.52