Intermediate Algebra (6th Edition)

Published by Pearson
ISBN 10: 0321785045
ISBN 13: 978-0-32178-504-6

Chapter 11 - Cumulative Review: 31

Answer

The amount owed at the end of 5 years is $\$2509.30$.

Work Step by Step

RECALL: The future value $A$ of an investment/loan that is compounded continuously is given by the formula: $A=Pe^{rt}$ where $P$ = amount invested/borrowed $r$ = annual interest rate $t$ = time in years The given problem has: $P =\$1600 $ $r=9\%=0.09$ $t=5$ years Substitute the values into the given formula above to obtain: $A=\$1600(e^{0.09(5)}) \\A=\$2509.299497 \\A\approx \$2509.30$ Thus, the amount owed at the end of 5 years is $\$2509.30$.
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