# APPLICATIONS OF EXPONENTIAL AND LOGARITHMIC FUNCTIONS (Interest Rate Word Problems)

1. To solve an exponential or logarithmic word problems, convert the narrative to an equation and solve the equation. Problem 5: If you invested \$1,000 in an account paying an annual percentage rate (quoted rate) of 12%, compounded continuously, how much would you have in you account at the end of 1 year, 10 years, 20 years, 100 years?

Answer: 1 Year = \$1,127.50, 10 years = \$3,320.12, 20 years = \$11,023.18, 100 years \$162,754,791.42

Solution and Explanations:
Use the formula where A is the balance at the end of a certain time period, P is the beginning investment of \$1,000, the annual interest rate is 12%, and t is the number of years.

To find the balance at the end of 1 year:
Substitute 1 for t in the equation to derive A: To find the balance at the end of 10 year:
Substitute 10 for t in the equation to derive A: To find the balance at the end of 20 year:
Substitute 20 for t in the equation to derive A: To find the balance at the end of 100 year:
Substitute 100 for t in the equation to derive A: If you would like to work another problem and check the answer and solution, click on Problem. [Previous Problem] [Menu Back to Applications]

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