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svp [43]
2 years ago
11

Suppose you invest $1000 at an interest rate of 6%, compounded annually. Calculate the equivalent interest rate under continuous

compounding (find the interest rate r that would give the same result if interest were compounded continuously). Hint: You can consider the situation for 1 year (let t=1).
Business
1 answer:
Vikki [24]2 years ago
8 0

Answer:

The equivalent interest rate under continuous compounding is 5.8%

Explanation:

Annual compounding

A = P(1+r)^n

P = $1,000

r = 6% = 0.06

n = 1 year

A = 1000(1+0.06)^1 = 1000(1.06) = $1060

Continuous compounding

A = Pe^rt

A = $1060

P = $1000

t = 1 year

1060 = 1000e^r

e^r = 1060/1000 = 1.06

e^r = 1.06

r = ln 1.06 = 0.058 = 5.8%

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Answer:

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Explanation:

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Henry Company traded in an old delivery truck for a new one. The old truck had a cost of $78,000 and accumulated depreciation of
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Answer:

The new truck will enter the account with the invoice value.

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3 years ago
tone Company produces carrying cases for CDs. It has compiled the following information for the month of June: Physical UnitsPer
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Answer:

TOTAL 258,000

TOTAL 258,000

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Therefore Using the FIFO method to reconcile the number of physical units will give us 258,000 and 258,000

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