Monday, March 2, 2015

College Algebra, Chapter 5, 5.4, Section 5.4, Problem 72

Suppose that an amount of $6500 is invested in an account that pays 6% interest per year, compounded continuously.

a.) What is the amount after 2 years?

b.) How long will it take for the amount to be $8000?


a.) Recall that the formula for interest compounded continuously,



A(t)=PertSo,A=6500[e(0.06)(2)]A=$7328.73


b.) If A=$8000, then


8000=6500e(0.06)t80006500=e(0.06)tln(80006500)=(0.06)tt=ln(80006500)0.06t=3.46 yrst=3 yrs+0.46 yrs(12 months1 yr)t=3 yrs+5.52 months


It shows that the amount will be $8000 when t is approximately 3 years and 6 months.

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