You deposit 50000 in a bank account which pays 34 interest c

You deposit $50,000 in a bank account which pays 3.4% interest compounded continuously (Show all steps). a. Find your balance after 5 years of your deposit. b. After how many years will your balance will reach $90,000?

Solution

Formula for continous compounding : Amount = Principal^(rate*time)

a) rate = 3.4% principal = $50,000; time = 5yrs

A = 50,000e^(0.034*5) = $59250

b) when balance will become $90,000

90,000 = 50,000e^(0.034t)

1.8 = e^(0.034t)

taking log on both sides:

ln(1.8) = 0.034t

t = 17.28 years