Hal invests $15,000.00 in a savings account which pays 7% compounded continuously. Consider the following formula, where A is the ending account balance after t years, P is the initial amount of money invested, and r is the interest rate.

A = P(2.71)rt

How much money would he have in his savings account after 2 years?
$17,246.74
$17,948.40
$15,610.26
$16,084.19

Question

Hal invests $15,000.00 in a savings account which pays 7% compounded continuously. Consider the following formula, where A is the ending account balance after t years, P is the initial amount of money invested, and r is the interest rate.

A = P(2.71)rt

How much money would he have in his savings account after 2 years?
$17,246.74
$17,948.40
$15,610.26
$16,084.19

solomonzelman · Answer

It's supposed to be to the power of  rt  , correct ?

anonymous · Answer

is it D?

anonymous · Answer

Yeahh.

wolf1728 · Answer

Continuously Compounded Rate of 7 % =
(e^r) -1
(2.718281828^.07)-1
=0.0725081812 or 7.25081812 % annual rate
A = 15,000 * (1.0725081812)^2
A = 15,000 * (1.1502737987)
A = 17,254.11

but that isn't one of the choices is it?

anonymous · Answer

nope its not,

anonymous · Answer

i figured it out. thanks for helping.

wolf1728 · Answer

Wow - okay - the continuously compounded interest too?
All right

wolf1728 · Answer

I got the answer.
I'm surprised that they rounded the value of 'e' as 2.71
I computed the compounded interest as (2.718281828)^.07
which = 1.1497825171
My method (using a more precise value of 'e') comes to 
1.1502737988
A small difference.  Well it amounts to a 2 year difference of 
$7.37