Question

Suppose you deposit your graduation cash gifts into an account that pays 4% annual interest compounded continuously. If you are 18 when you graduate, get $1000 in cash gifts and leave the money in the account until you are 30, how much money will you have? Round to the nearest dollar.

Answer 1

You will have $1,616.07 in the bank after 30 years.

The formula for continuous interest is T = PeRT

Just plug in and evaluate.

T = 1000e^(0.04 x 12) We use 12 because it will be in the bank for 12 years.
T = 1616.07