If $12000 is invested in an account in which the interest earned is continuously compounded at a rate of 2.5%

Mathematics

1 answer:

vladimir1956 [14]2 years ago

7 0

Complete Question

If $12000 is invested in an account in which the interest earned is continuously compounded at a rate of 2.5% for 3 years

Answer:

$ 12,934.61

Step-by-step explanation:

The formula for Compound Interest Compounded continuously is given as:

A = Pe^rt

A = Amount after t years

r = Interest rate = 2.5%

t = Time after t years = 3

P = Principal = Initial amount invested = $12,000

First, convert R percent to r a decimal

r = R/100

r = 2.5%/100

r = 0.025 per year,

Then, solve our equation for A

A = Pe^rt

A = 12,000 × e^(0.025 × 3)

A = $ 12,934.61

The total amount from compound interest on an original principal of $12,000.00 at a rate of 2.5% per year compounded continuously over 3 years is $ 12,934.61.

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