   Chapter 11.5, Problem 92E Finite Mathematics and Applied Cal...

7th Edition
Stefan Waner + 1 other
ISBN: 9781337274203

Solutions

Chapter
Section Finite Mathematics and Applied Cal...

7th Edition
Stefan Waner + 1 other
ISBN: 9781337274203
Textbook Problem

Investments If $20,000 is invested in a savings account offering 3.5% per year, compounded semiannually, how fast is the balance growing after 3 years? To determine To calculate: The rate at which the balance will grow after 3 years if$20,000 is invested in a savings account offering 3.5% per year, compounded semiannually.

Explanation

Given Information:

An amount of $20,000 is invested in a savings account offering 3.5% per year, compounded semiannually. Formula used: From the compound interest formula, the amount is given by the following formula: A(t)=I(1+rm)mt Where I= The money invested.r= The rate of interest.t= The time for which the money is invested.m=The time after which the interest is compounded. The following derivative formula is used: ddx(ax)=ln|a|(ax) Where ‘a’ is any constant. Calculation: Consider that$20,000 is invested in a savings account offering 3.5% per year, compounded continuously.

Consider the formula, A(t)=I(1+rm)mt

Here, I=\$20,000,r=0.035,m=2

Substitute the values in the formula

A(t)=20000(1+0.0352)2t=20000(1+0

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