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Moneysaver's Bank offers a savings account that earns 8% interest compounded continuously. If Kareem deposits $3100, how much will he have in the account
after two years, assuming he makes no withdrawals?
Do not round any intermediate computations, and round your answer to the nearest cent.

Respuesta :

Using continuous compounding, it is found that he will have $3,615.84 in the account after two years.

The amount of money in an account that uses continuous compounding, after t years, is given by:

[tex]A(t) = A(0)(1 + r)^t[/tex]

In which:

  • A(0) is the deposit.
  • r is the interest rate, as a decimal.

In this problem:

  • Deposit of $3,100, hence [tex]A(0) = 3100[/tex]
  • Interest rate of 8%, hence [tex]r = 0.08[/tex]

Then, after 2 years, we have t = 2, hence:

[tex]A(t) = A(0)(1 + r)^t[/tex]

[tex]A(2) = 3100(1 + 0.02)^2 = 3615.84 [/tex]

He will have $3,615.84 in the account after two years.

A similar problem is given at https://brainly.com/question/24722580

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