Question

A philanthropist deposits $2,000 in a trust fund that pays 5.0% interest, compounded continuously. the balance will be given to the college from which the philanthropist graduated after the money has earned interest for 20 years. how much will the college receive? (round your answer to the nearest cent.)

Answer 1

The formula for compounded continuously is A = pe^rt.

What is given?

(A)mount = ?
(P)rincipal = $2000
e = 2.7183 (always)
(r)ate = .05 (turn into decimal)
(t)imd = 20 years

Plug into formula:
A = 2000*2.7183^(.05*20)
A = $5436.60