Question

Eva invested $10,000 in a savings account. If the interest rate is 3.5%, how much will be in the account in 10 years by

compounding continuously? Round to the nearest cent.

Answer 1

The total in the account after 10 years would be: $14,190.68

Explanation:

Recall the formula for continuous compounding:

`A=P\,e^(r\,t)`

where "A" is the accrued value after t years (what we need to find), "P" is the principal invested (in our case $10,000), "r" is the interest rate in decimal form (in our case r = 0.035), and "t" is the time in years (in our case t = 10). Therefore the formula becomes:

`A=P\,e^(r\,t)\\A=10000\,\,e^(0.035\,*\.10)\\A=14190.68`

Therefore the total in the account after 10 years would be: $14,190.68