193k views
0 votes
Tessa invests $5500 in a new savings account which earns 4.1% annual interest, compounded continuously. what will be the value of her investment after 7 years? round to the nearest cent.

1 Answer

5 votes

The value of Tessa's investment after 7 years, rounded to the nearest cent, is approximately $7320.95.

The formula for compound interest compounded continuously is given by the formula:

A=P⋅e^{rt}

where:

A is the future value of the investment/loan, including interest.

P is the principal amount (the initial amount of money).

e is the mathematical constant approximately equal to 2.71828.

r is the annual interest rate (as a decimal).

t is the time the money is invested or borrowed for, in years.

In this case:

P = $5500,

r=0.041 (4.1% expressed as a decimal),

t=7 years.

Now, let's plug in these values into the formula:

A=5500⋅e^{0.041⋅7}

Using a calculator, we can find the value of this expression:

A≈5500⋅e^{0.287}

A≈5500⋅1.3329.

A≈7320.95.

Therefore, the value of Tessa's investment after 7 years, rounded to the nearest cent, is approximately $7320.95.

User Qqryq
by
8.3k points

No related questions found