Subjects finance

Continuous Compounding F4D445

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1. **State the problem:** Brianna invested 3900 in an account with an interest rate of 5.2% compounded continuously. We need to find the future value after 18 years. 2. **Formula used:** For continuous compounding, the future value $A$ is given by: $$A = P e^{rt}$$ where: - $P$ is the principal amount (3900), - $r$ is the annual interest rate as a decimal (0.052), - $t$ is the time in years (18), - $e$ is Euler's number (approximately 2.71828). 3. **Calculate the exponent:** $$rt = 0.052 \times 18 = 0.936$$ 4. **Calculate the future value:** $$A = 3900 \times e^{0.936}$$ 5. **Evaluate $e^{0.936}$:** Using a calculator, $e^{0.936} \approx 2.55$ 6. **Multiply to find $A$:** $$A = 3900 \times 2.55 = 9945$$ 7. **Round to the nearest ten dollars:** $9945$ rounds to $9950$ **Final answer:** After 18 years, the account will have approximately **9950**.