Problem

Suppose your great-great grandfather invested $\$ 900$ earning $5.5 \%$ interest compounded continuously 100 years ago. How much would his investment be worth today? Today his investment will be worth \$ (Do not round until the final answer. Then round to two decimal places as needed.)

Solution

Step 1 :Given that the principal amount (P) is $900, the annual interest rate (r) is 5.5% or 0.055 in decimal, and the time (t) is 100 years.

Step 2 :We can use the formula for continuous compounding, which is \(A = Pe^{rt}\), where A is the amount of money accumulated after n years, including interest.

Step 3 :Substitute the given values into the formula: \(A = 900 * e^{(0.055 * 100)}\)

Step 4 :\(\boxed{A = \$ 1,487,316.45}\)

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Source: https://solvelyapp.com/problems/WVhQsfkb9L/

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