You are saving your money in an account that accrues interest continuously at a rate of 6.25%You invest $12,500.

Question

Part A: Identify the values for the variables, and write an equation that can be used to find the amount of money in the account after a certain number of years,t .

Part B: Approximately how much money will be in your account after 2 years? Show your work.

Part C: If you are trying to save $25,000 , approximately how long will it take to reach your goal? (Round to the nearest hundredth.) Show your work to support your answer.

Answer 1

Part A: A = total amount of money in account, P = $12500, r = 0.0625, and t = time (in years)

A = Pe^rt

Part B: After 2 years this amount will be

A = 12500e^(0.0625)(2) = $14164.36

Part C: A = $25000

25000 = 12500e^0.0625t

2 = e^0.0625t after dividing each side by 12500

ln 2 = 0.0625t natural log of each side

0.693 = 0.0625t find ln 2 using calculator

11.09 = t after dividing each side by 0.693