Question

2) At age 22, Joseph places $4,500 in a retirement account with a fixed annual interest rate 7%,compounded continuously. He never places any additional money in the account. What will hisbalance be at age 55 ?

Answer 1

lets remember what it means compound continuously,

the interest never stopped, the balance is earning interest at all time

Joseph is 22 and he wants to know how much money he will have at 55

55-22=33

his balance will gain interest for 33 years, this is our time

there is a 7% rate

the formula is

P(t)= P(0) e ^rt

our t is 33

rate=7%

Joseph will have a balance at age 55, 45,334.99 dollars