Question

If the Laffite family deposits $8500 in a savings account at 6.75% interest, compounded continuously, how much will be in the account after 25 years? $227,338.93$45,950.57$38,094.36$38,720.02

Answer 1

The formula for compounded continuously is :

`A=Pe^(rt)`

where A is the future amount

P is the initital amount

e is some constant approximately equal to 2.71828...

r is the rate of interest and

t is the time in years

From the given problem,

P = 8500

r = 6.75% or 0.0675

t = 25 years

Using the formula above, the value of A after 25 years is :

`\begin{gathered} A=8500e^(0.0675(25)) \\ A=45950.57 \end{gathered}`

The answer is $45,950.57