Question

For her birthday, Patty's parents gave her $5,000.00 which they put into a savings account that earns 10% interest compounded continuously. When Patty started college, she withdrew the entire balance of $5,789.00 and used it to pay for tuition. How long was the money in the account?

Answer 1

1.465 years

Explanation:

First, convert R as a percent to r as a decimal

r = R/100

r = 10/100

r = 0.1 per year,

Then, to solve for time t, when compound interest is compounded continuously, the formula is given as:

t = ln(A/P) / r

Where

A = Amount after time t = $5,789.00

P = Principal = Initial amount = $5,00

r = 0.1

Hence,

t = ln(5,789.00/5,000.00) / 0.1

t = 1.465 years

Therefore, the money was in the account for 1.465 years