Calc

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

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asked by James
  1. compound interest formula is:

    FV=PV(1+(r/n))^(nT)

    As n approaches infinity, this formula becomes:

    FV=PV*e^(rt)

    for the 1st $1000 invested:
    FV=1000*e^(.07*20)

    for the 2nd $1000 invested:
    FV=1000*e^(.07*19)

    and so on for 20 years. The sum total of future values minus $20,000 deposited is the interest earned in the 20 years.

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    posted by FredR
  2. a.) $43,645.71

    b.) just do 1000*20 =20,000

    c.) a-b (43,645.71-20,000=23645.71)

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    posted by Kati

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