Question

Ali invests $4,078 in a retirement account with a fixed annual interest rate of 7% compounded

Answer 1

Answer:

The account balance will be $10,866 after 14 years

Step-by-step explanation:

Compound continuous interest can be calculated using the formula:

$A=Pe^{rt}$

• A = the future value of the investment, including interest

• P = the principal investment amount (the initial amount)

• r = the interest rate  

• t = the time the money is invested for

Let us use this rule to solve the question

∵ Ali invests $4,078 in a retirement account

∴ P = 4,078

∵ The account with a fixed annual interest rate of 7% compounded

   continuously

∴ r = 7% = $\frac{7}{100}$ = 0.07

∵ The time is 14 years

∴ t = 14

Substitute these values in the rule above to find A

∵ $A=4,078(e)^{0.07(14)}$

→ Use the calculator to find the value of A

∴ A = 10,865.65255

→ Round it to the nearest dollar

∴ A = $10,866

∴ The account balance will be $10,866 after 14 years