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Homework answers / question archive / You deposit $50,000 in a bank account at 15% annual interest
You deposit $50,000 in a bank account at 15% annual interest.
a. If no withdrawals are made, how much will you have in the account after 3 months?
b. How much would you have after 3 months if interest is compounded continuously?
Answer a)
Interest = Principle * Rate * Time
= 50,000 * 0.15 * 3 / 12
= 1875
Answer b)
Future Value = Present Value * e^(r*t)
r = 0.15
t = 3 /12 = 0.25
= 50,000 * e^(0.15*0.25)
= 50,000 * 1.03821199708
= 51910.60
Interest = 51910.60 - 50000 = 1910.60
