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:

A=PertA = P \cdot e^{rt}

Where:

  • AA is the amount after 9 years.
  • P=70,000P = 70{,}000 dollars (the principal).
  • r=6.1%=0.061r = 6.1\% = 0.061 (the interest rate as a decimal).
  • t=9t = 9 years.

Substituting the values into the formula:

A=70,000e0.0619A = 70{,}000 \cdot e^{0.061 \cdot 9}

A=70,000e0.549A = 70{,}000 \cdot e^{0.549}

Now, calculate e0.549e^{0.549}:

e0.5491.731e^{0.549} \approx 1.731

Then:

A70,0001.731121,170A \approx 70{,}000 \cdot 1.731 \approx 121{,}170

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:

  1. How much interest did Annabelle earn after 9 years?
  2. How would the amount change if the interest rate were 5.5% instead of 6.1%?
  3. What would be the amount after 15 years with the same interest rate?
  4. How does the final amount compare if the compounding is annual instead of continuous?
  5. 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

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Suitable Grade Level

Advanced High School