Rodrigo and Tina deposit 700.00 into a savings account which earns 1% interest compounded continuously. They want to use the money in the account to go on a trip in 3 years. How much will they be able to spend?

Solution

R o d r i g o an d T ina d e p os i t 700.00 in t o a s a v in g s a cco u n t w hi c h e a r n s 1% in t eres t co m p o u n d e d co n t in u o u s l y . T h ey w an t t o u se t h e m o n ey in t h e a cco u n t t o g o o n a t r i p in 3 ye a rs . Ho w m u c h w i ll t h ey b e ab l e t o s p e n d ?

Amount : 721.32

Solution steps

Translate the problem into an equation:

A = 700 e^{0.01 \cdot 3}

700 e^{0.01 \cdot 3} = 721.31817 \dots

Round to the nearest hundredth:

721.32

Amount : 721.32