QuestionJuly 15, 2025

An initial amount of 1200 is invested in an account at an interest rate of 4.5% per year, compounded continuously.Assuming that no withdrawals are made, find the amount in the account after seven years. Do not round any intermediate computations, and round your answer to the nearest cent.

An initial amount of 1200 is invested in an account at an interest rate of 4.5% per year, compounded continuously.Assuming that no withdrawals are made, find the amount in the account after seven years. Do not round any intermediate computations, and round your answer to the nearest cent.
An initial amount of 1200 is invested in an account at an interest rate of 4.5%  per year, compounded continuously.Assuming that no withdrawals are made,
find the amount in the account after seven years.
Do not round any intermediate computations, and round your answer to the nearest cent.

Solution
4.5(220 votes)

Answer

\1645.15 Explanation 1. Identify the formula for continuous compounding Use the formula for continuous compounding: **A = Pe^{rt}**, where P is the principal amount, r is the interest rate, and t is the time in years. 2. Substitute the given values Here, P = 1200, r = 0.045, and t = 7. Substitute these into the formula: A = 1200 \cdot e^{0.045 \cdot 7}. 3. Calculate the exponent Compute 0.045 \times 7 = 0.315. 4. Compute the exponential function Calculate e^{0.315} using a calculator to get approximately 1.3709590863840845. 5. Calculate the final amount Multiply the result by the principal: A = 1200 \cdot 1.3709590863840845 \approx 1645.1509036609014. 6. Round the result Round 1645.1509036609014 to the nearest cent to get 1645.15.

Explanation

1. Identify the formula for continuous compounding<br /> Use the formula for continuous compounding: **$A = Pe^{rt}$**, where $P$ is the principal amount, $r$ is the interest rate, and $t$ is the time in years.<br /><br />2. Substitute the given values<br /> Here, $P = 1200$, $r = 0.045$, and $t = 7$. Substitute these into the formula: $A = 1200 \cdot e^{0.045 \cdot 7}$.<br /><br />3. Calculate the exponent<br /> Compute $0.045 \times 7 = 0.315$.<br /><br />4. Compute the exponential function<br /> Calculate $e^{0.315}$ using a calculator to get approximately $1.3709590863840845$.<br /><br />5. Calculate the final amount<br /> Multiply the result by the principal: $A = 1200 \cdot 1.3709590863840845 \approx 1645.1509036609014$.<br /><br />6. Round the result<br /> Round $1645.1509036609014$ to the nearest cent to get $1645.15$.
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