An amount say #$800# is invested at a rate of interest of #5%# for #30# years. What is the amount at the end of the period if it is?
(a) compounded every year
(b) compounded monthly
(c) compounded every week
(d) compounded continuously.
(a) compounded every year
(b) compounded monthly
(c) compounded every week
(d) compounded continuously.
1 Answer
(a)
(c)
Explanation:
When we invest an amount say
However, when compounded, it depends on the fixed period after which it is compounded or rather how many times in a year interest is compounded. If it is compounded after every
the amount becomes
Here we have
(a) If compounded yearly i.e. once a year, as
(b) If compounded monthly i.e.
(c) If compounded weekly i.e.
(d) If compounded continuously, it approximates