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Rochelle deposits $6,000 in an IRA. What will be the value (in dollars) of her investment in 15 years if the investment is earning 9% per year and is compounded continuously? (Simplify your answer completely. Round your answer to the nearest cent.)

User Tendrid
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1 Answer

5 votes

Answer:

$ 23,145

Explanation:

This is a compound interest question where the interest is compounded continuously. Hence, the formula for the value of total amount of investment is:

A = P×e^rt

Where:

A = Total value of investment after t years

P = Principal or Initial amount invested = $6,000

e = Exponential function

r = interest rate = 9% = 0.09

t = time in years = 15

So:

A = $6000 × e^15 × 0.09

A = $6000 × e^1.35

A = $23,144.553184

Approximately , A ≈$23,145

Therefore, the value (in dollars) to the nearest cent of Rochelle's investment in 15 years if the investment is earning 9% per year and is compounded continuously is $23,145.

User Typeracer
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