Question

A deposit of $2,000 is made in a trust fund that pays 5.5% interest, compounded continuously. It is specified that the balance will be given to the college from which the donor graduated after the money has earned interest for 30 years. How much will the college receive? (Round your answer to the nearest cent.)

Answer 1

The formula for compounded continuously is A = pe^rt.

What is given?

(A)mount = ?
(P)rincipal = $2000
e = 2.7183 (always)
(r)ate = .05 (turn into decimal)
(t)imd = 20 years

Plug into formula:
A = 2000*2.7183^(.05*20)
A = $5436.60