Answer:
Annual: $302 737.50
Continuous: $332 507.52
Step-by-step explanation:
A. Compounded annually
The formula for compound interest is
A = P(1 + r)ⁿ
Data:
P = $45 000
r = 10 %
t = 20 yr
Calculations:
n = 20
A = 45 000(1+ 0.10)²⁰
= 45 000 × 1.10²⁰
= 45 000 × 6.727 499 95
= $302 737.50
B. Compounded continuously
The formula for continuously compounded inerest is
[tex]A = Pe^{rt}[/tex]
[tex]A = 45 000e^{0.10 \times20}[/tex]
[tex]= 45 000e^{2.0}[/tex]
= 45 000 × 7.389 056 61
= $332 507.52
