Sarah invested 2,500 in an account paying an interest rate of 2.1% compounded continuously. Assuming no deposits or withdrawals are made, how much money, to the nearest hundred dollars, would be in the account after 14 years?

Solution

S a r ah in v es t e d 2, 500 in an a cco u n t p a y in g an in t eres t r a t e o f 2.1% co m p o u n d e d co n t in u o u s l y . A ss u min g n o d e p os i t s or w i t h d r a w a l s a re ma d e, h o w m u c h m o n ey, t o t h e n e a res t h u n d re d d o ll a rs, w o u l d b e in t h e a cco u n t a f t er 14 ye a rs ?

Amount : 3354.46

Solution steps

Translate the problem into an equation:

A = 2500 e^{0.021 \cdot 14}

2500 e^{0.021 \cdot 14} = 3354.45975 \dots

Round to the nearest hundredth:

3354.46

Amount : 3354.46