SOLUTION: If you deposit $1000 in an account that pays 6% annual interest commpounded continuously, what will the balance be after five years?

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Question 669620: If you deposit $1000 in an account that pays 6% annual interest commpounded continuously, what will the balance be after five years?
Answer by jim_thompson5910(35256) About Me  (Show Source):
You can put this solution on YOUR website!
A=Pe%5E%28rt%29 Start with the continuous compounding formula.


A=1000%2Ae%5E%280.06%2A5%29 Plug in P=1000, r=0.06 (the decimal equivalent of 6%), and t=5.


A=1000%2Ae%5E%280.3%29 Multiply 0.06 and 5 to get 0.3.


A=1000%2A1.349858807576 Raise 'e' (which is approximately 2.71828) to the power 0.3 to get 1.349858807576 (this value is approximate).


A=1349.858807576 Multiply 1000 and 1.349858807576 to get 1349.858807576.


A=1349.86 Round to the nearest hundredth (ie to the nearest penny).


The balance after five years is $1349.86