Ed computes the ending balance for an account he is considering. The principal is $20,000, and the interest rate is 5.39%, compounded continuously for four years. He uses the formula B = pert and substitutes directly on his calculator. Look at the keystrokes he entered.
20,000e^ (.0539)(4)
He presses ENTER and sees this display.
20000e^ (.0539)(4) = 84430.32472
Ed's knowledge of compound interest leads him to believe that this answer is extremely unreasonable. To turn $20,000 into over $84,000 in just four years at 5% interest seems incorrect to him.
a. Find the correct ending balance.
b. Explain what part of Ed's keystroke sequence is incorrect.