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Question

When interest is compounded continuously, the amount of money increases at a rate proportional to the amount S present at time t, that is, d S / d t=r S, where r is the annual rate of interest.

Find the amount of money accrued at the end of 5 years when $5000 is deposited in a savings account drawing$5 34\frac{3}{4} %$ annual interest compounded continuously.

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Answered 7 months ago
Answered 7 months ago
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We have the amount of money as SS and this amount of money SS increases at time tt at a rate is proportional to SS as

dSdt=r S\begin{gather*} \dfrac{dS}{dt} = r \ S \tag{1} \end{gather*}

where rr is the annual rate of interest, with the condition

S(t=0)=5,000 dollars\begin{gather*} S (t = 0) = 5,000 \ \text{dollars} \end{gather*}

with an annual interest as r=534100=234100=0.0575r = \dfrac{5 \frac{3}{4}}{100} = \dfrac{\frac{23}{4}}{100} = 0.0575, and we have to obtain the amount of accrued money after 5 years5 \ \text{years}.

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