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Question

Suppose an investment account is opened with an initial deposit of $12,000 earning 7.2% interest compounded continuously. How much will the account be worth after 30 years?

Solution

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Remember the formula for a continuous growth/decay is represented by

A(t)=aertA(t) = ae^{rt}

where aa is the initial value, rr is the continuous growth rate and tt is the elapsed time.

Remember that if r>0r > 0, the formula shows continuous growth, while if r<0r < 0, then the formula shows continuous decay.

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