Question

Suppose you invest $1600 at an annual interest rate of 4.6% compounded continuously. How much will you have in the account after 4 years?

Answer 1

`\$1,923.23`

Explanation:

The formula to calculate continuously compounded interest is equal to

`A=P(e)^(rt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

e is the mathematical constant number

we have

`t=4\ years\\ P=\$1,600\\ r=0.046`

substitute in the formula above

`A=\$1,600(e)^(0.046*4)=\$1,923.23`