Recall that the compound interest formula for continuous compounding is A(P, r,
ID: 2855765 • Letter: R
Question
Recall that the compound interest formula for continuous compounding is A(P, r, t) = Pe^rt where A is the future value of an investment of P dollars after t years at an interest rate of r. Calculate and all evaluated at (100, 0.3, 9). (Round your answers to two decimal places.). Interpret your answers. For a $ 100 investment at accumulated amount is increasing at a rate of 9 per year. What does the function of t tell about your investment? tells you the rate at which the accumulated amount in an account bearing ?Explanation / Answer
A(P,r,t)=Pert
when calculating A/P . r,t are contants
A/P=ert
when calculating A/r . P,t are contants
A/r=Ptert
when calculating A/t . P,r are contants
A/t=Prert
P=100,r=0.3 =30% ,t =9 years
BLANKS:
A/P=e0.3*9=e2.7 =14.88 per 1$ of principle
A/r=100*9e2.7 =900e2.7=13391.7per increase of 1 in r
A/t=100*0.3e2.7=30e2.7=446.39 per year
b) BLANKS:
bearing 30% interest
100
increase
principal
t
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