when using the A=Pe^rt formula would t always be in years? or would that vary? because in this problem " Carmen is saving for a new car that costs $15000. If she puts $5000 in an account that earns 6% interest compounded monthly, how long will it take her to save enough money to buy the car?" and so i found the answer to be 18.4 and I'm just wondering if thats in years or months

Question

anonymous · Answer

if it is compounded monthly, that is the wrong formula to use
that formula $$A=Pe^{rt}$$ is for CONTINUOUS compounding, not monthly

anonymous · Answer

omg yes you are right!! sorry i meant to put in $$A=P(1+r \div n)^{nt}$$

anonymous · Answer

ok so disregarding the wrong formula, what would t be found in?

jim_thompson5910 · Answer

for either formula, t is in years

if you're given something in months, convert it to years

example

6 months = 0.5 years so t = 0.5

why is t in years? because the interest rate r is an annual (per year) rate