Maria deposited 25000 in an account today The annual intere

Maria deposited $ 25,000 in an account today. The annual interest rate is 3%. After 4 years, how much is in the account if interest is compounded quarterly? How much will be in the account after 4 years if interest is compounded continuously?

Solution

Principal,P= $25000

Interest rate,r=3%=.03

Time,t=4 years

A=P(1+(r/n))^n*t = 25000(1+(.03/4))⁴* ⁴ = 25000(1.0075)¹⁶= $28,175

Compounded continuously

A= P e^rt = 25000 e^{.03 *4} = 25000 e^.12 = $28,187