Solve the problem.
-If Emery has $1100 to invest at 6% per year compounded monthly, how long will it be before he has $2100? If the compounding is continuous, how long will it be? (Round your answers to three decimal places.)
A)0.133 yr, 1.078 yr
B)0.925 yr, 0.898 yr
C)106.985 yr, 11.11 yr
D)10.804 yr, 10.777 yr

Question

Quizplus · Accepted Answer

For monthly compounding, the formula is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($1100), r is the annual interest rate (6%, or 0.06), n is the number of times that interest is compounded per year (12 for monthly), and t is the time the money is invested for in years. For continuous compounding, the formula is A = Pe^(rt), where e is the base of the natural logarithm (approximately 2.71828). Solving each equation for t gives the respective times for the money to grow to $2100.

Solve the Problem. -If Emery Has $1100 to Invest at 6% Per Year