1.

Suppose you deposit $5000 at 8% interest compounded continuously. Find the average value of your account during the first 3 years.​

Answer»

The word continuous indicates that we have to use: A=Pe^(RT)
A is the new amount
P is the principal investment (or initial amount)
r is the rate (in DECIMAL FORM)
t is the time (in years)

When t=0
A = 5000e^(.09*0)
A= 5000

When t=2
A = 5000e^(.09*2)
A = 5986.09

To find the AVERAGE, we add the values and divide by the number of years.
(5000 + 5986.09) / 2
5493.04


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