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29 November, 18:02

You have $380,000

inyour bank account. The interest rate in your account is5%. Solve

for the following:

a. How muchinterest

will you accumulate if interest is compounded annually over the

next five years?

+5
Answers (1)
  1. 29 November, 18:54
    0
    If the capitalization method is continuous, the interest obtained will be $104986.99

    Step-by-step explanation:

    Cn = Co * (1 + i) ^n

    Co = 380,000

    i = 0.05

    n = 5

    So:

    Cn = 380,000 * (1+.05/1) ^ (1*5)

    Cn = 380,000 * (1+.05) ^5

    Cn = 380,000 * (105) ^5

    Cn = 380,000 * (1.2763)

    Cn = 484,986.99

    Cn - Co = interest acumulated:

    484,986.99-380,000 = $104986.99
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