Question
F = Pert ,which assumes continuous compounding, says that the Future value (F) of an amount (P) invested today at an annual rate (r), expressed
F = Pert ,which assumes continuous compounding, says that the Future value (F) of an amount (P) invested today at an annual rate (r), expressed as a decimal for the time (t), in years is given by the function. EXAMPLE: invest $100 at the annual rate of 5 1/2% for 6 years and 3 months and you should get back (at the end of the time), F = $100e(0.055)(6.25) = $100e(0.3438) = $100(1.4102) = $141.02. Here is a CD offer more in line with current rates. You have $5500 to invest. The bank will pay you 0.45% per annum. If you place your money for 1 year 6 months in this CD, what do you expect to get back at the end of the period?
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