Moneysaver's Bank offers a savings account that earns 5.5% interest per year, compounded continuously. If Linda deposits 1500, how much will she have in the account after five years, assuming she makes no withdrawals?

Solution

M o n eys a v e r^{'} s B ank o ff ers a s a v in g s a cco u n t t ha t e a r n s 5.5% in t eres t p er ye a r, co m p o u n d e d co n t in u o u s l y . I f L in d a d e p os i t s 1500, h o w m u c h w i ll s h e ha v e in t h e a cco u n t a f t er f i v e ye a rs, a ss u min g s h e mak es n o w i t h d r a w a l s ?

Amount : 1974.8

Solution steps

Translate the problem into an equation:

A = 1500 e^{0.055 \cdot 5}

1500 e^{0.055 \cdot 5} = 1974.79601 \dots

Round to the nearest hundredth:

1974.8

Amount : 1974.8