Question

The Martin family purchases a new home at a cost of $240,000. They finance the home for 30 years at 6% interest, compounded continuously

How much will the Martins pay for the house, including interest

Answer 1

Given:

Principal value = $240,000

Rate of interest = 6% compounded continuously.

Time = 30 years

To find:

The amount after interest.

Solution:

The formula for amount after continuous compounding the interest is:

`A=Pe^(rt)`

Where, P is principal, r is rate of interest and t is the number of years.

Putting
`P=240,000,r=0.06,t=30`, we get

`A=240,000e^(0.06(30))`

`A=240,000e^(1.8)`

`A=1451,915.39146`

`A\approx 1451,915.39`

Therefore, Martins will pay $1451,915.39 for the house, including interest.