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11 April, 02:15

Suppose that money is deposited daily into a savings account at an annual rate of $19,000. If the account pays 5,5 % interest compounded continuously, estimate the balance in the account at the end of 6 years.

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  1. 11 April, 02:25
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    Answer: $26,248.39

    Explanation: the formula for calculating continuous compounding is

    P x e^ (rate) (time)

    P=Principal

    R=Rate

    T = Time

    therefor the savings of $19,000 at the rate of 5.5% for 6 years is calculated thus:

    =$19,000 x e^ (0.055) (6)

    =$19,000 x e^ (0.33)

    =$26,248.39
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