Homework Answers
future value = present value * ert
where r = annual nominal rate of interest continuously compounded. This is 6%, or 0.06.
t = time in years
interest earned = future value - present value
a]
future value = $100 * e0.06*(30/365)
future value = $100.49
interest earned = $100.49 - $100 = $0.49
b]
future value = $100 * e0.06*(60/365)
future value = $100.99
interest earned = $100.99 - $100 = $0.99
c]
future value = $100 * e0.06*(120/365)
future value = $101.99
interest earned = $101.99 - $100 = $1.99
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