Question

Sydney has a savings account that has continuously compounded interest. If the starting deposit was $250 and the rate is 0.3%. How much money is in the account after 2 years?

Answer 1

First, set up an equation to model the problem. I will use the simple interest formula: I = (P)(r)(t); where P = principle amount, r = interest rate, and t = time.

First, substitute the known values into the formula:

P = $250

r = 0.3% = 0.003

t = 2

I = (250)(0.003)(2)

Now, all we have to do is simplify to find the amount of interest that will be added to Sydney's account after two years.

I = (0.75)(2)

I = 1.5

After two years, $1.50 will be added to Sydney's account. To find the total amount of money she will have after that time, just add the interest to her initial deposit:

250 + 1.5 = 251.50

So, your final answer is...

After two years, Sydney will have $251.50 in her account.

Hope this helps!