Question
In Exercise 63, notice that as the money is compounded more often, the compound amount becomes larger and larger. Is it possible to compound often enough so that the compound amount is $\$ 17,000$ after 10 years? Explain.
Step 1
Step 1: From Exercise 63, we have established that the more frequently you compound, the higher the amount becomes. Show more…
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Use the compound interest formulas, $A=P\left(1+\frac{r}{n}\right)^{n-1}$ and $A=P e^{n t},$ to solve Exercises $39-42 .$ Round answers to the nearest cent. Suppose that you have $\$ 12,000$ to invest. Which investment yields the greater return over 3 years: $7 \%$ compounded monthly or $6.85 \%$ compounded continuously?
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For the following exercises, use the compound interest formula, $A(t)=P\left(1+\frac{r}{n}\right)^{n t}$. Use the formula found in the previous exercise to calculate the interest rate for an account that was compounded semi-annually, had an initial deposit of $\$ 9,000$ and was worth $\$ 13,373.53$ after 10 years.
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