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Maria deposited $ 25,000 in an account today. The annual interest rate is 3%. After 4 years, how
much is in the account if interest is compounded quarterly? How much will be in the account
after 4 years if interest is compounded continuously?
Solution
Principal,P= $25000
Interest rate,r=3%=.03
Time,t=4 years
A=P(1+(r/n))n*t = 25000(1+(.03/4))4* 4 = 25000(1.0075)16= $28,175
Compounded continuously
A= P ert = 25000 e.03 *4 = 25000 e.12 = $28,187

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  • 1. Maria deposited $ 25,000 in an account today. The annual interest rate is 3%. After 4 years, how much is in the account if interest is compounded quarterly? How much will be in the account after 4 years if interest is compounded continuously? Solution Principal,P= $25000 Interest rate,r=3%=.03 Time,t=4 years A=P(1+(r/n))n*t = 25000(1+(.03/4))4* 4 = 25000(1.0075)16= $28,175 Compounded continuously A= P ert = 25000 e.03 *4 = 25000 e.12 = $28,187