   Chapter 2.2, Problem 90E Finite Mathematics and Applied Cal...

7th Edition
Stefan Waner + 1 other
ISBN: 9781337274203

Solutions

Chapter
Section Finite Mathematics and Applied Cal...

7th Edition
Stefan Waner + 1 other
ISBN: 9781337274203
Textbook Problem

Savings FlybynightSavings.com is offering a savings account that pays 31 % interest compounded continuously. How much interest would a deposit of $2,000 earn over 10 years? To determine To calculate: The interest earned over 10 years of deposit of$2000 if FlybynightSaving.com is offering a saving account that pays 31% compounded continuously.

Explanation

Given Information:

FlybynightSaving.com is offering a saving account that pays 31% compounded continuously and the amount of $2000 deposited for 10 years. Formula used: The formula for continuous growth is, A(t)=Pert Here, P is initial amount, r is rate of interest and t is time in year. The formula of interest is, I=AP Here, A is the value of deposit after certain time and P is initial value of deposit. Calculation: Convert the rate of interest in the decimal form. r=31%=31100=0.31 Since interest is compounded continuously therefore formula of continuous growth should be used here. The formula for continuous growth is, A(t)=Pert Substitute P=$2000, r=0.31 and t=10 in the expression A(t)=Pert

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