For Exercises 11–16, suppose that P dollars in principal is invested at an annual interest rate r . For interest compounded n times per year, the amount A ( t ) in the account after t years is given by A ( t ) = P ( 1 + r n ) n t . If interest is compounded continuously, the amount is given by A ( t ) = P e r t . Suppose an investor deposits $5000 in an account earning 6.5% interest compounded continuously. Find the total amount in the account for the following time periods. How does the length of time affect the amount of interest earned? a. 5 yr b. 10 yr c. 15 yr d. 20 yr e. 30 yr
For Exercises 11–16, suppose that P dollars in principal is invested at an annual interest rate r . For interest compounded n times per year, the amount A ( t ) in the account after t years is given by A ( t ) = P ( 1 + r n ) n t . If interest is compounded continuously, the amount is given by A ( t ) = P e r t . Suppose an investor deposits $5000 in an account earning 6.5% interest compounded continuously. Find the total amount in the account for the following time periods. How does the length of time affect the amount of interest earned? a. 5 yr b. 10 yr c. 15 yr d. 20 yr e. 30 yr
Solution Summary: The author calculates the total amount in the account using A(t)=Pert and the effect time has over the interest.
For Exercises 11–16, suppose that P dollars in principal is invested at an annual interest rate r. For interest compounded n times per year, the amount
A
(
t
)
in the account after t years is given by
A
(
t
)
=
P
(
1
+
r
n
)
n
t
. If interest is compounded continuously, the amount is given by
A
(
t
)
=
P
e
r
t
.
Suppose an investor deposits $5000 in an account earning 6.5% interest compounded continuously. Find the total amount in the account for the following time periods. How does the length of time affect the amount of interest earned?
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