Basic math!please help!!!!?
An ivestment of $500 000 is made which earns 7,5 % per year. If interest is compounded continuously:
A)determine the exponential function which states the compound amount S as a function of years of investment t
B)what will the $500 000 grow to its invested 10 years?20 years?
2.an investment $ 1 million which earns interest at the rate of 8,5 % per year is made. If interest is compounded continuously
A)what will the investment grow to
If it is invested for 10 years?25?
B)how long will it take for the investment to increase by 50%?
- MartinCLv 49 years agoFavorite Answer
The formula for continuously compounded interest is
A = Pe^rt, where P is the principal and r is the interest rate
In this case, we get A = 500000*e^(.075t)
To find the amounts after 10 or 20 years, substitute those values for t
Part A is the same type as 1A
To find the number of years required for a 50% increase, we want to find when the exponential on the right hand side of the equation equals 1.5.
1.5 = e^(.085t)
Take the natural log of both sides.
ln(1.5) = .085t
t = ln(1.5)/.085 = 4.77 years
- 9 years ago
for continuous compound , use formula
then let t= 10
plug in solve for S
do the same for other question.