Math Problem Statement
Annabelle invested $70,000 in an account paying an interest rate of 6.1% compounded continuously. Assuming no deposits or withdrawals are made, how much money, to the nearest ten dollars, would be in the account after 9 years?
Solution
To find the amount of money in the account after 9 years, we use the continuous compounding formula:
Where:
- is the amount after 9 years.
- dollars (the principal).
- (the interest rate as a decimal).
- years.
Substituting the values into the formula:
Now, calculate :
Then:
To the nearest ten dollars, the amount in the account after 9 years is approximately $121,170.
Would you like more details or have any questions? Here are some related questions you might find interesting:
- How much interest did Annabelle earn after 9 years?
- How would the amount change if the interest rate were 5.5% instead of 6.1%?
- What would be the amount after 15 years with the same interest rate?
- How does the final amount compare if the compounding is annual instead of continuous?
- How long would it take for Annabelle's investment to double with the same interest rate?
Tip: When dealing with continuous compounding, small changes in the interest rate or time can have a significant impact on the final amount, so it's important to be precise in calculations.
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Math Problem Analysis
Mathematical Concepts
Continuous compounding
Exponential functions
Formulas
Continuous compounding formula A = P * e^(rt)
Theorems
-
Suitable Grade Level
Advanced High School
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