Question

Jane plans to invest $500 at 8.25% interest, compounded continuously. After 14 years, how much money has she accumulated? Has her money doubled or tripled?

Answer 1

Principal amount = P = $500
Time = t = 14 years
Interest rate = r = 8.25% = 0.0825
Amount accumulated = A

Using the formula of compound interest:


`A=P e^(rt)`

Substituting the values, we get:


`A=500 e^(0.0825(14))=1587.01`

Thus the amount accumulated after 14 years will be $1587.01. Compared to the original amount of $500, this amount is tripled.