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Popular Word Problems >

Margaret invested 2000 at an annual interest rate of 4%, compounded continuously. If she does not make any withdrawals or deposits, approximately how much money will she have after 5 years?

Solution

M a r g a re t in v es t e d 2000 a t an ann u a l in t eres t r a t e o f 4%, co m p o u n d e d co n t in u o u s l y . I f s h e d oes n o t mak e an y w i t h d r a w a l s or d e p os i t s, a pp ro x ima t e l y h o w m u c h m o n ey w i ll s h e ha v e a f t er 5 ye a rs ?

Solution

Amount : 2442.81

Solution steps

Translate the problem into an equation:

A = 2000 e^{0.04 \cdot 5}

2000 e^{0.04 \cdot 5} = 2442.80551 \dots

Round to the nearest hundredth:

2442.81

Amount : 2442.81

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