Question

Suppose you invest $11,830.00 into an account earning an interest rate of 2.808% compounded continuously for 1 year(s) and thereafter earning an interest rate of 3.702% compounded monthly. How much money is in the account after 9 years?

Answer 1

$16,353.18

Explanation:

Amount invested in a business or in the bank account is called the principal amount. The Interest / Income is calculated on the basis of this value.

Principal = $11,830

First Year

Continuous Compounding

P(t) = P0e^rt

P(t) = $11,830 e^(2.808x1) = $12,166.89

Next Eight year

Principal = $12,166.89

Compounding Formula

A = P ( 1 + r/12)^nx12

A = $12,166.89 ( 1 + 3.702%/12)^8x12

A = $16,353.18