Question

Find the accumulated value of an investment of $5000 for 10 years at an interest rate of 6.5% if the money is a. compounded semiannually; b. compounded quarterly; c. compounded monthly; d. compounded continuously. please help me

Answer 1

For discrete compounding,
.. A = P*(1 +r/n)^(nt)

a) A = $5000*(1 +.065/2)^(2*10) ≈ $9479.19

b) A = $5000*(1 +.065/4)^(4*10) ≈ $9527.79

c) A = $5000*(1 +.065/12)^(12*10) ≈ $9560.92

d) A = P*e^(rt)
.. A = $5000*e^(.065*10) ≈ $9577.70