use either A=P(1+r/n)^nt or A=Pe^rt to answer each question

Question

1. what amounts results from a $480 investment at 7% compounded quarterly after 2 years?

 

2. what amount resutls from a $12,000 investment at 5.7% compounded continuously after 8 years?

 

3. how much should be invested to get $2000 after 6 years at 6% compounded semiannually?

 

4. how long does it take $1700 to double if it is invested at 5% interest compounded continuously?

Answer 1

Only use    A=Pe^rt    when asked to find continuously compounded.  The reason for this is because the amount is continuously increasing.  In terms of a graph, this would be an exponential function.  Exponential functions are associated with the number e≈2.72.