Question

A person places $7420 in an investment account earning an annual rate of 5.9%, compounded continuously. Using the formula V = Pe^{rt}V=Pe rt , where V is the value of the account in t years, P is the principal initially invested, e is the base of a natural logarithm, and r is the rate of interest, determine the amount of money, to the nearest cent, in the account after 20 years.

Answer 1

$24147.50

Explanation:

Step one:

given

principal=$7420

rate = 5.9%= 0.059

time = 20years

Step two:

Required

Final amount V

using the relation

`V = Pe^(rt)`

Substituting we have

`V = 7420e^(0.059*20)\\\\V=7420e^(1.18)\\\\V=7420*3.2543\\\\V=24147.456`

To the nearest cent

= $24147.50

The amount of money in the account after 20 years is $24147.50