SOLUTION: Suppose that $6000 is invested in an account where interest is compounded continuously at 3.7% per year. What is the balance after 1 year? after 2 years?

Algebra ->  Logarithm Solvers, Trainers and Word Problems -> SOLUTION: Suppose that $6000 is invested in an account where interest is compounded continuously at 3.7% per year. What is the balance after 1 year? after 2 years?      Log On


   

Question 250576: Suppose that $6000 is invested in an account where interest is compounded continuously at 3.7% per year. What is the balance after 1 year? after 2 years?
Answer by nerdybill(7384) About Me  (Show Source):
You can put this solution on YOUR website!
Suppose that $6000 is invested in an account where interest is compounded continuously at 3.7% per year. What is the balance after 1 year? after 2 years?
.
The equation for "continuously compounded interest" is:
A+=+Pe%5E%28rt%29
where
A is the amount after t years
P is the initial principal
r is the interest rate
t is the time
.
Your equation, with the parameters from your problem:
A+=+Pe%5E%28rt%29
A+=+6000e%5E%28.037t%29
.
For 1 year:
A+=+6000e%5E%28.037%281%29%29
A+=+6000e%5E%28.037%29
A+=+6000%281.03769%29
A = $6226.16
.
For 2 years:
A+=+6000e%5E%28.037%282%29%29
A+=+6000e%5E%28.074%29
A+=+6000%281.07681%29
A = $6460.84