Two accounts each begin with a deposit of $7000. Both accounts have rates of 6.5%, but one account compounds interest once a year while the other account compounds interest continuously. Make a table that shows the amount in each account and the interest earned after one year, five years, ten years, and 20 years. i Click the icon to view some finance formulas. 1 year Compounded annually Interest $ Balance $ Compounded continuously Balance Interest $ $
Two accounts each begin with a deposit of $7000. Both accounts have rates of 6.5%, but one account compounds interest once a year while the other account compounds interest continuously. Make a table that shows the amount in each account and the interest earned after one year, five years, ten years, and 20 years. i Click the icon to view some finance formulas. 1 year Compounded annually Interest $ Balance $ Compounded continuously Balance Interest $ $
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Two accounts each begin with a deposit of $7000. Both accounts have rates of 6.5%, but one
account compounds interest once a year while the other account compounds interest
continuously. Make a table that shows the amount in each account and the interest earned after
one year, five years, ten years, and 20 years.
iClick the icon to view some finance formulas.
1 year
5 years
10 years
20 years
Compounded annually
Interest
$
$
Balance
$
$
$
$
$
$
(Round to the nearest dollar as needed.)
Compounded continuously
Balance
Interest
$
$
Transcribed Image Text:In the provided formulas, A is the balance in the account after t years, P is the
principal investment, r is the annual interest rate in decimal form, n is the number
of compounding periods per year, and Y is the investment's effective annual yield
in decimal form.
nt
A=P(1 + - m²
P=
=
A
nt
(1 + 1)²
A = Pert
n
Y = (₁+) ^-₁
1
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