Question

Find the accumulated value of an investment of $7,000 at 7% compounded continuously for 6 years. Solve this question using the correct formula for compound interest.

Answer 1

`\$10,653.73`

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=6\ years\\ P=\$7,000\\ r=7\%=7/100=0.07`

substitute in the formula above

`A=7,000(e)^(0.07*6)`

`A=7,000(e)^(0.42)`

`A=\$10,653.73`