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Multiple Choice
is invested in an account that earns interest at a rate of and is compounded continuously. Find the particular solution that describes the growth of this account in dollars after years. Hint: When interest is compounded continuously, it grows exponentially with a growth constant equivalent to the interest rate.
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Verified step by step guidance
1
Recognize that the problem involves continuous compounding of interest, which follows the formula: , where is the amount after time , is the principal amount, is the interest rate, and is the time in years.
Identify the given values: The principal amount is $2000, the interest rate is 8.5% (or 0.085 in decimal form), and represents the time in years.
Substitute the given values into the formula: .
Simplify the expression to represent the particular solution: The formula becomes , which describes the growth of the account over time.
Conclude that this is the particular solution for the problem, where represents the account balance after years, given continuous compounding at an 8.5% interest rate.