Example 3.2 What is the amount of $1000 compounded at (a) 6% per annum, (b) at...

Transcribed Image Text:

Example 3.2 What is the amount of $1000 compounded at (a) 6% per annum, (b) at 6% per every quarter, (c) at 6% per annum compounded continuously for 10 yr? Solution (a) Here, i = 0.06, n = 10, and m = 1. Equation 3.2 becomes: F= 1000(1+0.06)= 1000(1.79085) = $1790.85 = (b) Here, i = 0.06, n = 10, and m 4. Equation 3.4 becomes: F=1000(1+0.06/4)4x10 = 1000(1.81402) = $1814.02 (c) Here, i = 0.06 and n = 10. Equation 3.5 becomes: F=1000e006x10=1000(1.82212) = $1822.122 Example 3.2 What is the amount of $1000 compounded at (a) 6% per annum, (b) at 6% per every quarter, (c) at 6% per annum compounded continuously for 10 yr? Solution (a) Here, i = 0.06, n = 10, and m = 1. Equation 3.2 becomes: F= 1000(1+0.06)= 1000(1.79085) = $1790.85 = (b) Here, i = 0.06, n = 10, and m 4. Equation 3.4 becomes: F=1000(1+0.06/4)4x10 = 1000(1.81402) = $1814.02 (c) Here, i = 0.06 and n = 10. Equation 3.5 becomes: F=1000e006x10=1000(1.82212) = $1822.122