Question

You invest 4,900 in an account that pays an interest rate of 5.5%, compounded continuously. Calculate the balance of your account after 6 years. Round your answer to the nearest hundredth.

Answer 1

In 6 years, you will have $6,815.57 = $6,800
Compounded daily.

Compound Interest Equation

A = P(1 + r/n)^nt

Where:

A = Accrued Amount (principal + interest)

P = Principal Amount

I = Interest Amount

R = Annual Nominal Interest Rate in percent

r = Annual Nominal Interest Rate as a decimal

r = R/100

t = Time Involved in years, 0.5 years is calculated as 6 months, etc.

n = number of compounding periods per unit t; at the END of each period