find the amount resulted from investment. $500 invested at 8% compounded quarterly after a period of 2 1/2 years

Question

anonymous · Answer

i know the equation is A=P(1+r/n)^nt i just cannot figure out what nt should be

hero · Answer

If it's compounded quarterly, n = 4, t = 2.5

anonymous · Answer

so its 10?

hero · Answer

Yep

anonymous · Answer

i don't think that correct because the answer in the back of the book is 609 and i got 685 using the 10

hero · Answer

did you make sure you put n = 4 in both appropriate places?

hero · Answer

let me see what I get...

anonymous · Answer

ohhh no you are correct!!!! my bad

anonymous · Answer

i put .08/2.5 instead of .08/4

hero · Answer

Yep, and now you have the correct answer

anonymous · Answer

what would n be if it was compounded daily and continuously?

hero · Answer

In the compound interest equation, n means number of times compounded per year. 


Semi-annually, n = 2
Quarterly, n = 4
Monthly, n = 12
Daily, n = 365

anonymous · Answer

perfect!!!! thank you so much!!

hero · Answer

Oh wait...

hero · Answer

Actually, for continuously, there's a different formula....you don't use n...

It's just A = P(1+r)^t

anonymous · Answer

yes i remember that now! same with yearly