Compound Interest Formula:



Compound Interest Formula: [pic]

Continuous Compounding: [pic]

Present Value Formulas: [pic]

If the interest is compounded continuously, then [pic]

1. Find the amount that results from each investment:

a) $100 invested at 4% compounded quarterly after a period of 2 years.

b) $50 invested at 6% compounded monthly after a period of 3 years.

2. Find the principal needed now to get each amount, that is, find the present value.

a) To get $100 after 2 years at 6% compounded monthly.

b) To get $75 after 3 years at 8% compounded quarterly.

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