Question

Joaquin deposits $1,000 into an account that accrues 4% annual interest continuously compounded. What is the value of his investment after 3 years to the nearest cent?

Answer 1

Deposit: $1,000

Annual interest: 4% = 0.04

Years: 3

For this type of question, when the question asks you to "continuously compound", you use this formula:
`Pe^(rt)`

Solving:

`1000e^((0.04)(3)) \\1000e^(0.12) \\=1127.50`

The value of Joaquin's investment after 3 years = 1,127.50$