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Tom invests $10,000 in a savings account that offers 3.5 percent interest, compounded continuously.
In 10 years Tom will have earned $ in interest, and in years the investment will double. (Use the rule of 70 where required.)

Respuesta :

Aliwohaish12
Yeah got it:)

The rule of 70 is
70/rate=Time
70÷3.5=20 years

Hope it helps

Answer:

Part 1:

Amount invested in savings = $10000

APR = 3.5% or 0.035

t = 10 years

As given the account is compounding continuously, so the future value of compound continuously is given by:

[tex]A=p e^{rt}[/tex]

Putting these values in formula we get;

[tex]A=10000\times e^{0.035\times10}[/tex]

A = $14,190.68

Interest earned = [tex]14190.68-10000=4190.68[/tex] dollars

Part 2:

The rule of 70 is used to get a rough estimate of the time, in which the investment will double. So, we divide 70 by the APR to get the years.

Time =[tex]70/3.5[/tex]

Time = 20 years

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