The focus here is the use of "Compounding interest rate" and these entails addition of interest to the principal sum of the deposit.
The below calculation is to derive maturity value when annual rate of 3.1% is applied.
Principal = $5,400
Annual rate = 3.1% semi-annually for 1 years
A = P(1+r/m)^n*t where n=1, t=2
A = 5,400*(1 + 0.031/2)^1*2
A = 5,400*(1.0155)^2
A = 5,400*1.03124025
A = 5568.69735
A = $5,568.70.
In conclusion, the accrued value she will get after one years for this account is $5,568.70,
- The below calculation is to derive maturity value when the amount compounds continuously at an annual rate of 4%
Principal = $5,400
Annual rate = 4% continuously
A = P.e^rt where n=1
A = 5,400 * e^(0.04*1)
A = 5,400 * 1.04081077419
A = 5620.378180626
A = 5620.378180626
A = $5,620.39.
In conclusion, the accrued value she will get after one years for this account is $5,620.39.
Referring to how much would Tyra's balance be from Account 2 over 3.7 years. It is calculated as follows:
Annual rate = 4% continuously
A = P.e^rt where n=3.7
A = 5,400 * e^(0.04*3.7)
A = 5,400 * e^0.148
A = 5,400 * 1.15951289636
A = 6261.369640344
A = $6,261.37
Therefore, the accrued value she will get after 3.7 years for this account is $6,261.37
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