Upon entering college, Meagan borrowed the limit of $5000 on her credit card to help pay for expenses. The credit company charges 19.95 % interest compounded continuously. How much will Meagan owe when she graduates in four years ?
I wanted to use A(t)=A(0)e^rt, and r=19.95%, t=4, A(0)=5000
so I was thinking
A(t) = A(0)e^(rt)
A = (5,000)e^(.1995)(4)
Am I doing this correctly ? how do I calculate the rest? Is this is all I need ?
thanks!
Answer
How come you wrote the basis is $\;e\;$ and the exponent is $\;0.1995\;$ ?
I'd say the basis is $\;a:=1+\frac{19.95}{100}=1.1995\;$ , and the exponent is $\;4\;$ , so the ammount is
$$5,000\cdot(1.1995)^4\cong 10,350.73$$
assuming the interest is charged annually.
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