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Popular Word Problems >

Imagine you have P1000 to invest in a savings account with an annual interest rate of 5%, compounded continuously. After 5 years, how much money will you have?

Solution

I ma g in e yo u ha v e P 1000 t o in v es t in a s a v in g s a cco u n t w i t h an ann u a l in t eres t r a t e o f 5%, co m p o u n d e d co n t in u o u s l y . A f t er 5 ye a rs, h o w m u c h m o n ey w i ll yo u ha v e ?

Solution

Amount : 1284.03

Solution steps

Translate the problem into an equation:

A = 1000 e^{0.05 \cdot 5}

1000 e^{0.05 \cdot 5} = 1284.02541 \dots

Round to the nearest hundredth:

1284.03

Amount : 1284.03

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