Question

The Martin family purchases a new home at a cost of $240,000. They finance the home for 30 years at 6% interest, compounded continuously
How much will the Martins pay for the house, including interest

Answer 1

Given:

Principal value = $240,000

Rate of interest = 6% compounded continuously.

Time = 30 years

To find:

The amount after interest.

Solution:

The formula for amount after continuous compounding the interest is:

$A=Pe^{rt}$

Where, P is principal, r is rate of interest and t is the number of years.

Putting $P=240,000,r=0.06,t=30$, we get

$A=240,000e^{0.06(30)}$

$A=240,000e^{1.8}$

$A=1451,915.39146$

$A\approx 1451,915.39$

Therefore, Martins will pay $1451,915.39 for the house, including interest.