Question

Edgar accumulated $11,000 in credit card debt. If the interest rate is 30% per year and he does not make any payments for 3 years, how much will he owe on this debt in 3 years by compounding continuously?

Answer 1

$27,055.63

Explanation:

The formula for continuously compounded interest is:

`F = Pe^(rt)`

where

F = future value

P = current principal value

r = annual interest rate as a decimal

t = time in years

In this problem, we are looking for F. We are given

P = $11,00

r = 30% = 0.3

t = 3

We use the formula to find F.

`F = $11000e^(0.3 * 3)`

`F = $11000e^(0.9)`

`F = $11000(2.459603)`

`F = $27055.63`

Answer: In 3 years, he will owe $27,055.63

Answer 2

= 1.38778e-141 which makes interest a large amount 139 million and 108 hundred thousand and fourhundred and four.

Explanation:

The equation is A= P 1+ r/n ^nt

So we input for A = (11000) x 1.30/11000 ^ 36 x 3

= 1.38778e-141 which makes interest a large amount 139 million and 108 hundred thousand and fourhundred and four.

The formula used in the compound interest calculator is A = P(1+r/n)(nt)

A = the future value of the investment

P = the principal investment amount

r = the interest rate (decimal)

n = the number of times that interest is compounded per period

t = the number of periods the money is invested for

Year Year Deposits Year Interest Total Deposits Total Interest Balance

1 $0.00 $245,278.94 $11,000.00 $245,278.94 - $256,278.94

2 $0.00 $5,714,529.54 $11,000.00 $5,959,808.47 - $5,970,808.47

3 $0.00 $133,137,595.61 $11,000.00 $139,097,404.08-$139,108,404.08