finding interest

Question

1.  if interest is compounded annually, how much is $1000 work in 8 yrs at 8%?  (show the formula to use)

 

 

 

2.  the formula to find the total amount in your savings account (if interest is compounded continuously) after t years is A = Pe^rt (A = total amount, P = orginal amount and r - interest rate).

 

a.   how long does it take your money to double at 8% interest?  (round to the nearest year)

 

b.  at 5% interest? (round to the nearest year)

 

thanks

Answer 1

1.Future value =1,000*(1.08)⁸=1,850.93

 

2.A=Pe^rt  If A=2P then 2=e^rt solving for t gives t=ln(2)/r

a. ln(2)=.08t so t=8.66 or approx 9 years

b. ln(2)=.05t so t=13.86 or approx 14 years

 

Regards

Jim