Question

The Kwans are saving for their daughter’s college education. If they deposit $12,000 in an account bearing 6.4% interest compounded continuously, how much will be in the account when Ann goes to college in 12 years?

Answer 1

Answer:

 

$25,865.41

Step-by-step explanation:

Answer 2

This is calculated using the formula of: A = Pe(rt), where A is the total amount, P is the principal amount, e is mathematical constant approximately equal to 2.71828, r is the rate of interest, then t is the time in years.

Given we have the P as $12,000, r is 0.064 and t is 12, we expressed these values to the formula as;

A = Pe(rt)
A = 12,000.e(0.064 x 12)
A = 12,000 x 2.71828e
A = 12,000 x 2.155
A = $25,860

Therefore the money that Ann will have in 12 years is $25,860.