Question

If leticia invested $12,000 in an account in which the interest earned is continuously compounded at a rate of %2.5 find the total amount after 15 years

Answer 1

Given:

Principal value = $12000

Rate of interest = 2.5%

To find:

Total amount after 15 years.

Solution:

Formula for amount discontinuously compounded interest is

`A=Pe^(rt)`

where, P is principal, r is rate of interest and t is time in years.

Substitute P=12000, r=0.025 and t=15 in the above formula.

`A=12000e^(0.025(15))`

`A=12000e^(0.375)`

`A=12000(1.45499141462)`

`A=17459.8969754`

`A\approx 17459.897`

Therefore, the amount after 15 years is $17459.897.