SOLUTION: Please solve this word problem, about continuous compounding You invest $1,100 in an account that has an annual intrest rate of 2.1%, compounded continuously. How much money wil

Algebra ->  Logarithm Solvers, Trainers and Word Problems -> SOLUTION: Please solve this word problem, about continuous compounding You invest $1,100 in an account that has an annual intrest rate of 2.1%, compounded continuously. How much money wil      Log On


   

Question 252990: Please solve this word problem, about continuous compounding
You invest $1,100 in an account that has an annual intrest rate of 2.1%, compounded continuously. How much money will be in the account after 7 years?
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
continuous compounding formula is

f+=+p%2Ae%5E%28r%2At%29

f = future value
p = present amount
r = annual interest rate expressed as a proportion (percent divided by 100% = proportion)
t = time in years
e = the scientific constant that is equivalent to 2.718281828.........

in your problem:

p = $1,100
r = 2.1% / 100% = .021
t = 7

substitute in the formula to get:

f+=+1100%2Ae%5E%28.021%2A7%29

answer is:

f = 1274.189359

you will have $1,274.19 at the end of 7 years using continuous compounding.