Use the formula for continuous compounding to compute the balance in the account after 1, 5, and 20 years. Also,find the APY for the account.A $14,000 deposit in an account with an APR of 4.75%.The balance in the account after 1 year is approximately $(Round to the nearest cent as needed.) Calculate the amount of money you'll have at the end of the indicated time period.You invest $4000 in an account that pays simple interest of 2% for 30 years.The amount of money you'll have at the end of 30 years is $

Answered: Use the formula for continuous…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 6P

See similar textbooks

Related questions

Question

Use the formula for continuous compounding to compute the balance in the account after 1, 5, and 20 years. Also,
find the APY for the account.
A $14,000 deposit in an account with an APR of 4.75%.
The balance in the account after 1 year is approximately $
(Round to the nearest cent as needed.)

Calculate the amount of money you'll have at the end of the indicated time period.
You invest $4000 in an account that pays simple interest of 2% for 30 years.
The amount of money you'll have at the end of 30 years is $

Expert Solution

Step 1

Future value of continuously compounding present value

With annual interest rate (r), period in years (n) and continuously compounded present value (PV), the future value (FV) is calculated as shown below.

$F V = P V \times e^{(r \times n)}$

Annual percentage yield (APY)

With annual nominal interest rate (r) and number of compounding in a year (m), APY is calculated as shown below.

$A P Y = {(1 + \frac{r}{m})}^{m} - 1$

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions