Use the compound interest formulas A P 1 rn and A Pert to

Use the compound interest formulas A = P |^1 + r/n and A = Pert to solve the problem given. Round answers to the nearest cent. Find the accumulated value of an investment of dollar 25,000 for 3 years at an interest rate of 7% if the money is a. compounded semiannually; compounded ninthly; compounded continuously What the accumulated value if the money is compounded semiannual? (Round your answer to the nearest cent.) What is the accumulated value if the money is compounded monthly? (Round your answer to the nearest cent.) What is the accumulated value if the money is compounded continuously? (Round your answer to the nearest cent.)

Solution

a) compounded semiannually , n = 2

A = P ( 1 + r/n)^nt

P = 25000

t = 3 years

rate of interest = 7%

plugging the values in the formula we get

A = 25000( 1+ .07/2)^3*2

A = $30731.38

b) compounded monthly , n = 12

A = 25000( 1+ .07/12)^12*3

A =$ 30823.14

c) compounded continuously

applyiing continuous compunding formula

A = Pe^rt

A = 25000 e^ (.07*3)

A = $30841.95