Aaron invested 7,500 in an account paying an interest rate of 1.5% compounded continuously. Assuming no deposits or withdrawals are made, how much money, to the nearest hundred dollars, would be in the account after 8 years?

Solution

A a ro n in v es t e d 7, 500 in an a cco u n t p a y in g an in t eres t r a t e o f 1.5% 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 8 ye a rs ?

Amount : 8456.23

Solution steps

Translate the problem into an equation:

A = 7500 e^{0.015 \cdot 8}

7500 e^{0.015 \cdot 8} = 8456.22638 \dots

Round to the nearest hundredth:

8456.23

Amount : 8456.23