Stobart puts $40 in a bank where the interest rate is 6% a year compounded continuously.

a) What will be the value of the investment in 12 years?

b)How long will it take for the investment to grow to $100?

Question

Stobart puts $40 in a bank where the interest rate is 6% a year compounded continuously.

a) What will be the value of the investment in 12 years?

b)How long will it take for the investment to grow to $100?

gschibby · Answer

Value year 1 = 40 * 1,06
Value year 2 = 40 * 1,06^2
Value year n = 40 * 1,06^n
Value year 12 = ? ;)

anonymous · Answer

Value year 40*e^(0.06) 12 ?

gschibby · Answer

Value year 12 = 40 * 1,06^12 ;)

gschibby · Answer

80,5

gschibby · Answer

For the other part you plot in 100 = 40 * 1,06^x and solve for x

anonymous · Answer

why do you add 1,06 isn't it 0.06

gschibby · Answer

No, 0.06 is just the increase. I guess you could type it like this:
40+(40*0.06)
But it's much easier this way :)

gschibby · Answer

And it's not + it's *, you multiply with 1.06 ;)

gschibby · Answer

$$ValueYear12 = 40 * 1.06^{12}$$