amount = 700(1.005)^(12t)
amount = 700(1.005)^100
= 1152.67
You have 700 dollars in your bank account. Suppose your money is compounded every month at a rate of 0.5 percent per month.
(a) How much do you have after t years.
(b) How much do you have after 100 months
2 answers
(a) The value after t years is modeled using the monthly interest rate:
(Value After t Months) = (Initial Value)*(Rate)^(12 Months * t)
Q(t) = Q(0)*(1.005)^(12*t) => Q(t) = 700*(1.005)^(12t)
(b) To find the value after 100 months, modify the formula from part a to;
Q(t) = 700*(1.005)^(t), as we're dealing with months now, not years. Once that is done, plug in 100 for t in the new formula:
Q(100) = 700*(1.005)^(100) = 1152.66794
(Value After t Months) = (Initial Value)*(Rate)^(12 Months * t)
Q(t) = Q(0)*(1.005)^(12*t) => Q(t) = 700*(1.005)^(12t)
(b) To find the value after 100 months, modify the formula from part a to;
Q(t) = 700*(1.005)^(t), as we're dealing with months now, not years. Once that is done, plug in 100 for t in the new formula:
Q(100) = 700*(1.005)^(100) = 1152.66794
4 answers