NO
you used the concept of continuous compounding
but it said it was compounded monthly
Even with the above in consideration your expression of
8888(e^0.06(0.25))
makes absolutely no sense.
i = .06/12 = .005
n = 3(12) = 36 months
PV = 8888(1.005)^-36
= $7427.21
For a single investment, there is one main formula:
Amount = PV (1+i)^n <------> PV = Amount (1+i)^-n
where i is the periodic rare, and n is the number of interest periods
for annuity you have
Amount = payment ( (1+i)^n - 1)/i
Present value = payment ( 1 - (1+i)^-n)/i
The vast majority of compound interest problems are handled with these 3 formulas.
Memorize them.
8.find the amount to be invested now at 6% compounded monthly so as to accumulate $8888 in three years.
solution :
p=8888
i=6%
t= 3/360=0.0008
$8888(e^0.06(0.25))
=9022.32
the answer is $ 7427.21
2 answers
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2 answers