Question

Jackson deposited $5,000 at 3.8% interest, compounded continuously, when he was 18 years old. How much will be in the account when he is 40 years old if he made no other deposits or withdrawals?

$19,000.19
$11,535.60
$10,691.38
$8,800.00

Answer 1

$11535.60 will be in his account when he is 40 years old

Explanation:

Jackson deposited $5,000 at 3.8% interest, compounded continuously, when he was 18 years old

Time period is from 18 years to 40 years

t= 40 - 18 = 22

For compounding continuously we use formula

`A= Pe^(rt)`

P = initial amount deposited = 5000

r= rate of interest = 3.8% = 0.038

t= time period = 22 years

now plug in all the values and find out A final amount

`A= 5000e^(0.038*22)`

`A= 5000e^(0.836)`

A= 11535.60