Question

Aaron invested $7,500 in an account paying an interest rate of 1.5% compounded continuously. Assuming no deposits or withdrawals are made, how much money, to the nearest hundred dollars, would be in the account after 8 years?

Answer 1

Answer: 8500

Explanation:

\text{Compounded Continuously:}

Compounded Continuously:

A=Pe^{rt}

A=Pe

rt

P=7500\hspace{35px}r=0.015\hspace{35px}t=8

P=7500r=0.015t=8

Given values

A=7500e^{0.015(8)}

A=7500e

0.015(8)

Plug in

A=7500e^{0.12}

A=7500e

0.12

Multiply

A=8456.22638685

A=8456.22638685

Use calculator (with e button)

A\approx 8500

A≈8500

Round to nearest hundred dollars

Answer 2

7500*1.015^8 = 8447.69