Question

The formula to determine continuously compounded interest is A = Pe^rt, where A is the amount of

money in the account, P is the initial investment, r is the interest rate, and t is the time, in years.
What equation could be used to determine the value of an account with an $18,000 initial
investment at an interest rate of 1.25% for 24 months?

Answer 1

`A=18000 \cdot e^(0.0125 \cdot 2)`

`A=18455.67` (Approximated)

Step-by-step explanation:

`A=Pe^(rt)`

We are given the following along with the equation we are to use:

`P=18000`

`r=1.25\%=(1.25)/(100)=0.0125`

Be careful it says
`t` is in years and it gives us a time that is in months.

`12 \text{months}=1 \text{ year}`:

`t=(24)/(12)=2`

Let's plug in our information:

`A=18000 \cdot e^(0.0125 \cdot 2)`

Plugging in the right hand side into my calculator gives:

`A=18455.67` (Approximated)