Algebra 2 chapter 10

Question

If 5500 is invested at a rate of 8% compounded continuously, find the balance in the account after 2 years

Answer 1

Hello, thank you for taking the time to post your question!

Since the interest here is being compounding continuously, we want to use the formula

A = P*e^(rt) , where

P = principal = 5500

r = rate = 8% = 0.08

t = time = 2 years

plugging those values into the equation yields

A = 5500*e^(0.08*2)

A = 6454.31

So the balance in the account after two years in this scenario is $6,454.31

I hope that helps get you moving in a better direction on this type of question! Feel free to reach out if you have any additional questions beyond that :)

Answer 2

The formula for continuous compounding is:

 

A = Pe^rt

 

Where A is the final amount, P is the initial amount, r is the rate expressed as a decimal and t is time in years.  For your problem P=$5500, r=8%=0.08, and t=2:

 

A = (5500)e^(0.08)(2) = (5500)e^0.16

 

Solve for A (use your calculator)