SOLUTION: A bank account starts with $700 and earns an annual interest rate of 6%. Use the continuous compounding formula to estimate the balance after 4 years.
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Question 1137109: A bank account starts with $700 and earns an annual interest rate of 6%. Use the continuous compounding formula to estimate the balance after 4 years.
B= Answer by Theo(13342) (Show Source):
f is the future value.
p is the present value.
r is the interest rate per time period.
t is the number of time periods.
e is the scientific constant of 2.718281828.
in your problem, .....
p is 700.
r = 6% = .06 per year.
t = 4 yers.
the formula becomes f = 700 * e ^ (.06 * 4).
solve for f to get f = 889.8744052.
if you don't have the constant e in your calculator, then f = 700 * 2.718281828 ^ (.06 * 4) = the same.
