Final answer:
To calculate continuous compounding, use the formula A=P*e^rt with an 8.5% interest rate. The significance of the 0.5% difference depends on the specific context and values involved in the problems, and without more details, it's challenging to determine its impact precisely.
Step-by-step explanation:
In this question, we need to calculate the accumulation for continuous compounding at 8.5%. To do this, we can use the formula for continuous compounding:
A = P*e^(rt), where A represents the accumulation, P is the principal amount, r is the interest rate, and t is the time period. Let's assume the principal amount is $1000 and the time period is 1 year:
Calculate the accumulation using the formula A = P*e^(rt).
Compare this result to the accumulation calculated in Problem 5.21, where the interest rate was 8%.
Determine the significance of the 0.5% difference between the two accumulations to understand the impact.