Question

In 2002, a certain town recorded 15,300 acres of underdeveloped land. Each year

after, the amount of land decreased continuously by 7% due to residential and

commercial development. Find the approximate amount of underdeveloped land in

2013.

A. A = 15300 e -0.07(2013)

B. A = 15300 -0.7(2013)

C. A = 15300 -0.07(11)

D. A = 15300 e-0.7(11)

Answer 1

The approximate amount of underdeveloped land in 2013 is A = 15300 X e^-0.07(11).

How do you determine the future value when there is continuous compounding?

The formula for calculating future value of an investment when there is continuous compounding is A = P x   $e^{r}$x N

Where:

• P = population in 2002
• r = rate of decrease = 0.07
• n = number of years = 2013 - 2002 = 11 years

A = 15300 X e^-0.07(11)

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