The Kwans are saving for their daughter's college education. If they deposit $12,000 in an account bearing 6.4% interest compounded continuously, how much will be in the account when Ann goes to college in 12 years?

Question

Mathematics

Mikaela Wade

30 May, 03:27

The Kwans are saving for their daughter's college education. If they deposit $12,000 in an account bearing 6.4% interest compounded continuously, how much will be in the account when Ann goes to college in 12 years?

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Joanna Walsh · Answer 1

This is calculated using the formula of: A = Pe (rt), where A is the total amount, P is the principal amount, e is mathematical constant approximately equal to 2.71828, r is the rate of interest, then t is the time in years.

Given we have the P as $12,000, r is 0.064 and t is 12, we expressed these values to the formula as;

A = Pe (rt)

A = 12,000. e (0.064 x 12)

A = 12,000 x 2.71828e

A = 12,000 x 2.155

A = $25,860

Therefore the money that Ann will have in 12 years is $25,860.