Question

You deposit $6000 in an account earning 6% interest compounded continuously. How much will you have in the account in 10 years?

Answer 1

Step 1:

Write the compounded interest continuously formula.

`\text{A = Pe}^(rt)`

Step 2:

Given data

P = $6000

r = 6% = 0.06

t = 10 years

Step 3:

Substitute in the formula

`\begin{gathered} A\text{ = Pe}^(rt) \\ A\text{ = 6000 }*\text{ 2.7183}^(10*0.06) \\ A\text{ = 6000 }*\text{ 2.7183}^(0.6) \\ A\text{ = 6000 }*\text{ 1.822126} \\ A\text{ = \$10932.76} \end{gathered}`

Final answer

A = $10933 ( nearest whole number)