Question

Jimmy invests $2,936 in a retirement account with a fixed annual interest rate of 5% compounded continuously. What will the account balance be after 18 years?

A) $6,599.86

C) $6,534.19

B) $7,221.39

D) $6,869.20

Answer 1

B) $7,221.39

Explanation:

Given data

Principal=$2,936

Rate=5%

n=12

Time = 18 years

The expression for compound interest is

A=P(1+r/n)^nt

substitute

A= 2936(1+0.05/12)^12*18

A= 2936(1+0.00416)^12*18

A= 2936(1.00416)^12*18

A= 2936(1.00416)^216

A= 2936*2.45149

A=7197.57464

Hence the approximate amount is B) $7,221.39