Question

Miguel’s bank is offering savings accounts with 4% interest compounded continuously, If Miguel invests $500 how much will he have after 2 years

Answer 1

After 2 years Miguel will have in his account $541.64

Explanation:

The formula for calculating compound interest continuously is:

`A=pe^(rt)`

Where A is the amount of money obtained after t years.

r is the compound interest rate and p is the initial amount

In this case we have that:

`p=\$500\\\\t=2\ years\\\\r=0.04`

Then we must find the final amount A

`A=500e^(0.04(2))`

`A=\$541.64`