Aiso deposits $110/month in a savings account paying 8% / year compounded continuously. Estimate the amount that will be in his account after 15 years.
A) $37,048
B) $36,139
C) $38,282
D) $42,603

Question

Quizplus · Accepted Answer

We can use the formula for continuous compounding, which is:

A = Pe^(rt)

Where:

A = the amount after 15 years
P = the initial deposit or present value, which is 0 since Aiso starts saving with $110 per month
r = the annual interest rate, which is 8%
t = the time in years, which is 15

We need to find the value of A, so we can rewrite the formula as:

A = 110 * e^(0.08*15)

A = $38282.88

The closest choice to this result is C, $38,282. Therefore, the correct answer is C.

Aiso Deposits $110/month in a Savings Account Paying 8