On the day of a child's birth, a parent deposits $35,000 in a trust fund that pays 4% interest, compounded continuously. Determi

Question

mr_godi [17]

3 years ago

5

On the day of a child's birth, a parent deposits $35,000 in a trust fund that pays 4% interest, compounded continuously. Determi

ne the balance in this account on the child's 24th birthday. (Round your answer to two decimal places.)

Business

2 answers:

Dmitrij [34] · Answer 1 · 2022-06-05T08:10:47+03:00

Dmitrij [34]3 years ago

6 0

Answer:

$91,409

Explanation:

Balance = 35000*e^(0.04*24)=$91409

BlackZzzverrR [31] · Answer 2 · 2022-06-05T09:33:35+03:00

Answer:

$91,409 .32

Explanation:

the formula used to calculate continuously compounded interest:

A = Peˣⁿ

where:

A = future value = ?
P = principal = $35,000
e = mathematical constant = 2.71828
x = interest rate = 4% = 0.04
n = periods = 24 years

A = $35,000 x 2.71828⁰°⁰⁴ˣ²⁴ = $35,000 x 2.71828⁰°⁹⁶ = $35,000 x 2.61169 = $91,409.32

Continuously compounding interest means that your money and earned interest is earning interest all the time, i.e. it is continuously compounding infinitely many times per year.