m 9 A person deposited 1000dollars in 1996 in a bank that pa

m 9. A person deposited 1000dollars in 1996 in a bank that paid 6% interest: problem 9. A How 1 Primuch would be the balance in vear 2016 if interest were compound (quarterly 2 w much would it be the balance if compounded continuously at a rate of 6%6? 1996 20 16

Solution

t= 20 years

compounded quarterly

so n = 4 ; nt=4*20 = 80

principal = P = 1000

rate r = 6%

now by compound interest formula we get

B = 1000*(1+0.06/4)^80 = 3290.663 dollars

and if it is compounded continuously we get

t= 20, n=12 (every month)

B = 1000*(1+ 0.06/12)^240 = 3310.205 dollars