Question

If 4000 dollars is invested in a bank account at an interest rate of 10 per cent per year,

Find the amount in the bank after 9 years if interest is compounded annually:

Find the amount in the bank after 9 years if interest is compounded quarterly:

Find the amount in the bank after 9 years if interest is compounded monthly:

Finally, find the amount in the bank after 9 years if interest is compounded continuously:

Answer 1

a) $4,000(1.10⁹) = $9,431.79

b) $4,000(1 + .10/4)³⁶ = $9,730.14

c) $4,000(1 + .10/12)¹⁰⁸ = $9,801.79

d) $4,000e^(.10×9) = $9,838.41