Question

You open a savings account and deposit $2,000. After 1 year of earning continuously compounded interest, your balance is $2,026.17. After 2 years, the balance is $2,052.68. Assuming you make no deposits or withdrawals, find the equation for the best-fitting exponential function to represent the balance of the account after x years. How much money will be in the account after 10 years?

Answer 1

Answer:

rate = 1.3085%

Amount after 10 years with no withdrawals nor deposits : 2,277.66

Explanation:

the formula for compound interest is as follow:

$Principal \: (1+ r)^{time} = Amount$

We plug our values and solve for rate:

$2,000 \: (1+ r)^{1} = 2,026.17$

r  = 2,026.17 /2,000 - 1 = 0.013085 = 1.3085%

in ten years we have:

$2,000\: (1+ 0.013085)^{10} = Amount$

Amount = 2,277.66