Problem 900

 

Use the continuous compound interest formula to find the indicated  value.

P = 4000, r = 4.35%, t = 5 years , A = ?

 

Solution:-

 

If a principal P is invested at an annual rate r (expressed as a decimal) compounded continuously, then the amount A in the account at the end of t  years is given by the following formula.

A = Pert

The values for P, r, and t are given. However, r must be converted to a decimal.

P = 4000 , r = 0.0435, t= 5

Substitute these values into the formula and simplify, rounding to the nearest cent.

A = Pert

= 4000e(0.0435*5)

= 4971.86

The amount in the account after 5 years is about 4971.86.

 

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