Question

You invest $900 in an account that pays an interest rate of 5.5%, compounded continuously. calculate the balance of your account after 6 years. round your answer to the nearest hundredth

Answer 1

$1251.87

Explanation:

You invest $900 in an account that pays an interest rate 5.5%, compounded continuously. Calculate the balance of your account after 6 years.

In this question it is given that interest 5.5% is compounded continuously, it means your principal amount is constantly earning interest. We use the formula :

`A = Pe^(rt)`

Where A = Amount

P = Principal amount ($900)

e = Mathematical constant e

r = rate of interest 5.5% ( 0.055)

t = Time in years (6)

Now we put the values

`A=900(e)^((0.055)(6))`

`A=900(e)^(0.33)`

`A=900(2.718282^(0.33) )`

A = 900 × 1.390968

A = 1251.871316 rounded to $1251.87

The balance of your account after 6 years would be $1251.87.