Question

A person places $37700 in an investment account earning an annual rate of 5%,

compounded continuously. Using the formula V = Peșt, where Vis the value of the

account in t years, P is the principal initially invested, e is the base of a natural

logarithm, and r is the rate of interest, determine the amount of money, to the

nearest cent, in the account after 16 years.

Answer 1

8,229,437 cents

Explanation:

Using the compound interest formula;

A = P(1+r)^n

Given

Principal invested = $37700

rate r = 5% = 0.05

Time t = 16years

Substitute into the formula

A = 37700(1+0.05)^16

A = 37700(1.05)^16

A = 37700(2.1829)

A = 82,294.37

Hence the amount of money, to the nearest cent, in the account after 16 years is 8,229,437 cents