Question

You invest $17,804 in a CD that has a 6.275% annual interest rate, compounded continuously. How much will you have in 25 years?Round to the nearest cent.

Answer 1

R = 3.813% per year.

Explanation:

• A = Accrued amount (principal + interest)

• P = Principal amount

• r = Annual nominal interest rate as a decimal

• R = Annual nominal interest rate as a percent

• r = R/100

• n = number of compounding periods per unit of time

• t = time in decimal years; e.g., 6 months is calculated as 0.5 years. Divide your partial year number of months by 12 to get the decimal years.

• I = Interest amount

• ln = natural logarithm.