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Jermaine invests $2,711 in an account that earns 4.2% that is compounded on a continuous basis. If leaves that money in the account for 11 years, what will be the amount of INTEREST that Jermaine was able to earn? [YOU ARE ASKED TO FIND THE INTEREST ONLY!)

Respuesta :

Recall the formula for continuously compounded interest:

[tex]A=P\cdot e^{r\cdot t}[/tex]

Where P is the principal (in our case $2711),

A is the accumulated total at the end of the investing period,

r is the annual interest rate (in our case 4.2% which in decimal form becomes: 0.042)

t is the time of the investment in years (in our case 11)

Then, we have:

[tex]A=2711\cdot e^{.462}=\text{ }4303.02[/tex]

Then, the amount that is strictly the interest would be the difference:

4303.02 - 2711 = $1592.02

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