Question

Suppose an investment account is opened with an initial deposit of $17,500 earning 5.75% interest, compounded continuously. How much will the account be worth after 25 years? (Round your answer to two decimal places.)

Answer 1

The continuously compounded formula is given by:

$A=Pe^{rt}$

where P is the principal, r is the interest rate in decimal form and t is the time.

In this case the principal is 17500, the interest rate is 0.0575 and the time is 25; then we have:

$\begin{gathered} A=17500e^{(0.0575)(25)} \\ A=73677.75 \end{gathered}$

Therefore, there will be $73,677.75 after twenty five years.