Question

Use the formula for continuous compounding to compute the balance in the account after​ 1, 5, and 20 years.​ Also, find the APY for the account. A ​$7000 deposit in an account with an APR of 3.3​%.

The balance in the account after 1 year is approximately ​$

The balance in the account after 5 years is approximately ​$

The balance in the account after 20 years is approximately ​$ ​(Round to the nearest cent as​ needed.)

Answer 1

P = 7000

r = 0.033 (in decimal form)

t = changing, and A is what we need to find.

a) t = 1 then:

(rounded to nearest cent)

b) t = 5 then:

(rounded to nearest cent)

c) t = 20 then:

(rounded to nearest cent)

So, in percentage term: APY = 3.0% (rounded to 1 decimal places)

or 3.05% (rounded to 2 decimal places)

Please comment if any doubt. Thank you.