Math Problem Statement
Solution
The question asks to find the average amount earned per year between the 5th year and the 10th year for an investment of $5000 compounded continuously at 4% interest. Here's how we can solve it using the values provided on the graph.
We are provided the values of the function at two key points:
- At years, dollars.
- At years, dollars.
To find the average annual amount earned between the 5th and 10th years, we first calculate the total amount earned in that interval, then divide it by the number of years.
Steps:
-
Calculate the total amount earned:
-
Find the number of years between the 5th and 10th year:
-
Average earnings per year:
Thus, the average amount earned per year between the 5th and 10th years is $270.40, which matches the value you have already entered.
Let me know if you need further clarification or details!
Here are 5 related questions you might want to explore:
- How does continuous compounding differ from annual or quarterly compounding?
- What is the formula for continuous compounding, and how can it be applied in this problem?
- How would the average change if the interest rate were 5% instead of 4%?
- Can you estimate the average annual growth between the 10th and 20th years based on the graph?
- What would be the total value after 30 years at 4% continuous compounding?
Tip: When dealing with interest problems, remember that the formula for continuously compounded interest is , where is the amount, is the principal, is the interest rate, and is the time in years.
Ask a new question for Free
By Image
Drop file here or Click Here to upload
Math Problem Analysis
Mathematical Concepts
Continuous Compound Interest
Average Growth
Formulas
A = P * e^(rt)
Average annual earnings = (f(10) - f(5)) / (10 - 5)
Theorems
Exponential Growth in Continuous Compound Interest
Suitable Grade Level
Grades 9-12
Related Recommendation
Calculate Amanda's Investment Growth with Continuous Compounding Over 5 Years
Continuous Compounding Investment Calculation: $5000 at 5.25% Over 10 Years
Continuous Compounding of Interest: $400 at 6% for 5 Years
Calculate Future Balance with Continuous Compounding for a $5000 Investment at 2% Interest over 20 Years
Is a Continuous Compound Interest Investment Linear or Exponential?