Compound Interest is all about the interests compounded in most banks more than once a year. At first, we determine the final amount of our compounded interests by having the formula:
where,
A is the final amount
P is the initial/principal amount
r is the rate
n is the how many times in a year
t is the how many years
But if n reaches infinity and rate is at 100%? This will reach the exact value of Euler's Number (e), where e = 2.71828...
Euler's number is a non-repeating and non-terminating decimal.
In this case, if the interests were compounded continuously, then we can use the formula since not all the cases suggests 100% rate and t=1.
Now let's answer the problem.
Given:
P = 850 315
r = 10.5%
t = 12
Unknown:
A = ?
Solution:
Formula of Continuous Compounding Interests Substitution
Answers & Comments
Answer:
The amount will be 2 997 718.772
Step-by-step explanation:
Compound Interest is all about the interests compounded in most banks more than once a year. At first, we determine the final amount of our compounded interests by having the formula:
where,
But if n reaches infinity and rate is at 100%? This will reach the exact value of Euler's Number (e), where e = 2.71828...
Euler's number is a non-repeating and non-terminating decimal.
In this case, if the interests were compounded continuously, then we can use the formula since not all the cases suggests 100% rate and t=1.
Now let's answer the problem.
Given:
P = 850 315
r = 10.5%
t = 12
Unknown:
A = ?
Solution:
Formula of Continuous Compounding Interests Substitution
2 997 718.772 Simplify