Problem

Suppose that $P$ dollars in principal is invested for $t$ years at the given interest rates with continuous compounding. Determine the amount that the investment is worth at the end of the given time period.
\[
P=\$ 14,000, t=11 \text { yr }
\]
(a) $2 \%$ interest
(b) $3 \%$ interest
(c) $6.5 \%$ interest

Answer

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Answer

So, the investment would be worth approximately \(\boxed{$17,080.79}\) at 2% interest, \(\boxed{$18,716.68}\) at 3% interest, and \(\boxed{$23,982.96}\) at 6.5% interest.

Steps

Step 1 :Convert the interest rate from a percentage to a decimal by dividing by 100. So, \(r = \frac{2}{100} = 0.02\).

Step 2 :Substitute \(P = $14,000\), \(r = 0.02\), and \(t = 11\) into the formula \(A = Pe^{rt}\): \(A = 14000 * e^{(0.02*11)} = 14000 * e^{0.22}\)

Step 3 :\(A \approx $17,080.79\)

Step 4 :Convert the interest rate to a decimal: \(r = \frac{3}{100} = 0.03\).

Step 5 :Substitute \(P = $14,000\), \(r = 0.03\), and \(t = 11\) into the formula: \(A = 14000 * e^{(0.03*11)} = 14000 * e^{0.33}\)

Step 6 :\(A \approx $18,716.68\)

Step 7 :Convert the interest rate to a decimal: \(r = \frac{6.5}{100} = 0.065\).

Step 8 :Substitute \(P = $14,000\), \(r = 0.065\), and \(t = 11\) into the formula: \(A = 14000 * e^{(0.065*11)} = 14000 * e^{0.715}\)

Step 9 :\(A \approx $23,982.96\)

Step 10 :So, the investment would be worth approximately \(\boxed{$17,080.79}\) at 2% interest, \(\boxed{$18,716.68}\) at 3% interest, and \(\boxed{$23,982.96}\) at 6.5% interest.

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