Answer:
The balance in the account after 12 years is $5417.42
Explanation:
* Lets talk about the compound continuous interest
- Compound continuous interest can be calculated using the formula:
A = P e^rt
• A = the future value of the investment, including interest
• P = the principal investment amount (the initial amount)
• r = the interest rate
• t = the time the money is invested for
- The formula gives you the future value of an investment,
which is compound continuous interest plus the
principal.
- If you want to calculate the compound interest only, you need
to deduct the principal from the result.
- So, your formula is:
Compounded interest only = Pe^(rt) - P
* Now lets solve the problem
∵ P = $ 2800
∵ r = 5.5/100 = 0.055
∵ t = 12
∴ A = 2800 e^(0.055 × 12) = $5417.42
* The balance in the account after 12 years is $5417.42