Question

Clarence and Avery deposit $1,000.00 into a savings account which earns 13% interest compounded continuously. They want to use the money in the account to go on a trip in 2 years. How much will they be able to spend? Use the formula A=Pert, where A is the balance (final amount), P is the principal (starting amount), e is the base of natural logarithms (≈2.71828), r is the interest rate expressed as a decimal, and t is the time in years. Round your answer to the nearest cent.

Answer 1

The amount Clarence and Avery will be able to spend in 2 years from their savings account is approximately $1,339.92.

Step-by-step explanation:

To calculate the amount Clarence and Avery will be able to spend in 2 years, we can use the formula A = Pert, where A is the final amount, P is the principal (starting amount), e is the base of natural logarithms, r is the interest rate as a decimal, and t is the time in years.

In this case, Clarence and Avery deposited $1,000.00 into the savings account, the interest rate is 13% (0.13 as a decimal), and the time is 2 years. Plugging these values into the formula, we get:

A = 1000 * e^(0.13 * 2)

Using a calculator, we find that A ≈ $1,339.92. Therefore, Clarence and Avery will be able to spend approximately $1,339.92 from their savings account for their trip in 2 years.