- #1
brake4country
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- Homework Statement
- The formula for compound interest is given by
𝐴(𝑡)=𝐼(1+ (0.01×𝑟/n))^𝑛𝑡,
where 𝐼 is the initial amount invested in dollars, 𝑟 is the annual interest rate (expressed as a percent % rate), 𝑛 is the number of times interest is compounded per year, 𝑡 is the time in years since the initial investment and 𝐴(𝑡) is the amount, or balance, in dollars after 𝑡 years have passed.
Suppose you invest $350 today into an account with an annual rate of 3.11% which is compounded 3 times each year. Answer the following questions about the growth of your investment.
- Relevant Equations
- 1. What is the instantaneous rate at which your investment grows (in dollars per year) as a function of 𝑡 ?
2. What is the rate at which the investment is growing (in dollars per year) after 17 years?
3. What is the true percent increase of the investment at the end of the first year?
1. 350*(1+(0.0311)/3)*ln(1+(0.0311)/3)
2 and 3. Not sure how to answer these questions.
2 and 3. Not sure how to answer these questions.