Kim Wilson deposits 40, 000 dollars in an IRA at 2% interest compounded continuously for her retirement in 20 years. She intends to make continuous deposit at the rate of 1, 200 dollars a year until she retires. How much will she has accumulated at that time?

Step 1:

Kim Wilson deposits the amount is .

The rate of interest is .

The time perid is .

The amount is compounded continuously.

Formula for continuous compounding : .

.

She intends to make continuous deposit is .

The time period is .

The annuity formula is , where is the balance in the account after years, is the regular deposit, is the annual interest and is the compounding period in one year. \ \

.

.

The total amount accumulated is .

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She accumulated the amount at retirement time is .