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Answer: c) $7.53
With continuous compounding at 9% per annum, the monthly growth factor is: \[ e^{0.09/12} \] Monthly interest on $1,000 is therefore: \[ 1000\left(e^{0.09/12}-1\right) \] \[ \approx 1000(1.007528-1)=7.528 \approx 7.53 \] So the monthly interest payment is **$7.53**.
Author: Manit Arora
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$1,000 loan as 9.0% per annum with continuous compounding but the interest is actually paid monthly. What are the monthly interest payments?A
a) $7.47
B
b) $7.50
C
c) $7.53
D
d) $7.59
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