compounded continously
posted by Anonymous on .
Wnat to have $60,000 in an account after 40 years. How much needs to be deposited inthe APR is 16.3% compounded daily?

Compounded Continuously
Pt = Po*e^rt = $60000,
r = (16.3%/365) / 100% = 0.0004466 = Daily % rate expressed as a decimal.
t = 40yrs * 365days/yr = 14600 days.
rt = 0.0004466 * 14600 = 6.52.
Po * e^6.52 = 60000,
Po = 60000 / e^6.52 = $88.42 = initial deposit.
ComPounded Daily
Pt = Po*(1+r)^n = $60000,
r = (16.3%/365) / 100% = 0.0004466 =
daily % rate express as a decimal.
n = 365comp./yr * 40yrs = 14600 comp.
periods.
Po*(1.0004466)^14600 = 60000,
Po = 60000 / (1.0004466)^14600 = $88.52 = initial deposit.