Question

1. You decide to deposit $20,000 into an account that pays 6.5% interest compouded monthly. How much money will you have in the account after 40 years? 2. You put $20,000 into an account that pays 7.25% compounded continuously. How much money will you have in there after 10 years?

Answer 1

use the formula for interest compounded in n periods per year

`A=P\cdot(1+(r)/(n))^(nt)`

where n should 12 since it is compounded monthly

`\begin{gathered} A=20,000\cdot(1+(0.065)/(12))^(12\cdot40) \\ A=267,392.05 \end{gathered}`