Question

The Kwans are saving for their daughterÍs college education. If they deposit $12,000 in an account bearing 6.4% interest compounded continuously, how much will be in the account when Ann goes to college in 12 years?

Answer 1

Principal amount (P) = $12000
Rate of interest (I) = 6.4%
Time of deposit = 12 years
Let us assume the final amount to be = A
Then
A = P ( 1+r ) ^ t
= 12000 (1 + 0.064) ^12
= 12000(1.064)^12
= 12000 * 2.105
= 25260 dollars
From the above deduction, it can be concluded that the account will have $25260, when Ann goes to college in 12 years.