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Sarita deposits $1000 in an account paying 3.4% annual interest compounded continuously.
A. What is the balance in Sarita's account after 5 years?

Sagot :

Considering continuous compounding, it is found that the balance of her account after 5 years is of $1,185.3.

What is the equation for continuous compounding?

It is given by:

[tex]A(t) = Pe^{kt}[/tex]

In which:

  • P is the principal.
  • k is the interest rate.
  • t is the time, in years.

In this problem, the parameters are given as follows: P = 1000, r = 0.034, t = 5, hence:

[tex]A(5) = 1000e^{0.034(5)} = 1185.3[/tex]

The balance of her account after 5 years is of $1,185.3.

More can be learned about continuous compounding at https://brainly.com/question/15965736

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