Question

Jamie invests $1,200 in an account that earns 3% interest. Assuming continuous compounding, how much is in his account after 7 years?

Answer 1

The amount in account after 7 years of investment is $1478.4

Explanation:

Given as :

The principal invested in account by Jamie = p = $1200

The rate of interest = r = 3% compounded annually

The Time period of investment = t= 7 years

Let The Amount in Jamie account = $ A

For continuous compounding

Amount = Principal ×
`e^(r * time)`

Or, A = p ×
`e^(r * time)`

Or, A = $1200 ×
`e^(0.03 * 7)`

Or, A = $1200 ×
`2.71^(0.03 * 7)`

Or, A = $1200 × 1.232

∴ A = $1478.4

So, The amount after continuous compounding = A = $1478.4

Hence , The amount in account after 7 years of investment is $1478.4 Answer