Posted by James on .
A person deposits money into a retirement account, which pays 7% interest compounded continuously, at a rate of $1000 per year for 20 years. Calculate:
a. The balance of the account at the end of 20 years
b. the amount of money actually deposited into the account
c. the interest earned during the 20 years.
I think i know that for part a you use the integral to find the future value maybe, but i have no idea how to do b or c
compound interest formula is:
As n approaches infinity, this formula becomes:
for the 1st $1000 invested:
for the 2nd $1000 invested:
and so on for 20 years. The sum total of future values minus $20,000 deposited is the interest earned in the 20 years.
b.) just do 1000*20 =20,000
c.) a-b (43,645.71-20,000=23645.71)