Question

Suppose you invest $300 at annual interest rate of 4.5% compounded continuously.

How much will you have in the account after 7.5 years?

Answer 1

`\$420.43`

Explanation:

we know that

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=7.5\ years\\ P=\$300\\ r=0.045`

substitute in the formula above

`A=300(e)^(0.045*7.5)`

`A=\$420.43`