Subjects finance

Continuous Interest 57Aefa

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1. **Problem statement:** Mary deposited 980 at 7 percent interest compounded continuously. We want to find how much money she has at the end of 9 years. 2. **Formula used:** The formula for continuous compounding is $$A_t = Pe^{rt}$$ where: - $A_t$ is the amount after time $t$ - $P$ is the principal (initial amount) - $r$ is the annual interest rate (as a decimal) - $t$ is the time in years 3. **Given values:** - $P = 980$ - $r = 0.07$ - $t = 9$ 4. **Substitute values into the formula:** $$A_9 = 980 e^{0.07 \times 9}$$ 5. **Calculate the exponent:** $$0.07 \times 9 = 0.63$$ 6. **Rewrite:** $$A_9 = 980 e^{0.63}$$ 7. **Evaluate $e^{0.63}$ using a calculator or approximation:** $$e^{0.63} \approx 1.877$$ 8. **Multiply:** $$A_9 = 980 \times 1.877$$ 9. **Calculate the product:** $$A_9 \approx 1839.46$$ 10. **Final answer:** Mary will have approximately **1839.46** at the end of 9 years with continuous compounding.