Answer:
Step-by-step explanation:
We know that,
where,
A = Amount after time t,
P = Principle amount,
r = Rate of interest,
n = Number of times interest is compounded per year,
t = time period in year.
Investment of $25,000 for 4 years at an interest rate of 5% if the money is compounded semiannually
Here,
P = $25,000
r = 5% = 0.05
n = 2 (as compounded semiannually)
t = 4 years
Putting the values,
Investment of $25,000 for 4 years at an interest rate of 5% if the money is compounded quarterly.
Here,
P = $25,000
r = 5% = 0.05
n = 4 (as compounded quarterly)
t = 4 years
Putting the values,
Investment of $25,000 for 4 years at an interest rate of 5% if the money is compounded monthly.
Here,
P = $25,000
r = 5% = 0.05
n = 12 (as compounded monthly)
t = 4 years
Putting the values,
Investment of $25,000 for 4 years at an interest rate of 5% if the money is compounded continuously.
where,
A = Amount after time t,
P = Principle amount,
r = Rate of interest,
t = time period in year.
Putting all the values,
It can be observed that, the frequent we compound the amount, the more we get.