Question

A recent graduate invested $12,000 in a savings account. if the interest rate is 6%, how much will be in the account in 10 years by compounding continuously? round your answer to the nearest cent. do not round until you have calculated the final answer.

Answer 1

To calculate the amount of money in the account after 10 years with continuous compounding, use the formula A = P * e^(rt).

Step-by-step explanation:

To calculate the amount of money in the account after 10 years with continuous compounding, we use the formula A = P * e^(rt), where A is the final amount, P is the principal, r is the interest rate, and t is the time in years. In this case, P = $12,000, r = 6% (or 0.06), and t = 10.

Substituting these values into the formula, we get A = $12,000 * e^(0.06*10).

Using a calculator, we find that A is approximately $21,005.40.

Therefore, there will be approximately $21,005.40 in the account after 10 years.