Question

One the day a child's birth, a parent deposite 30,000 in a trust fund that pays 5 percent interest, compounded continuously. Determine the balance in the account the child's 25 birhtday?

Answer 1

Answer:

  $104,710.29

Step-by-step explanation:

The amount is given by ...

  A = Pe^(rt)

where P is the principal invested at annual rate r for t years. Filling in the numbers, we get ...

  A = 30000e^(.05·25) = 30000e^1.25 ≈ 104,710.29

The balance will be about $104,710.29 on the child's 25th birthday.