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How much would $500 invested at 3% interest compounded continuously be worth after 6 years? Round your answer to the nearest cent.

User Albin N
by
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2 Answers

7 votes

Answer:

598.60 is the right answer

Explanation:

User Qiao
by
8.5k points
5 votes

You are given the equation

A(t) = P*e^(rt)

Where P = Principal
r = interest rate
t = time

e is a mathematical constant equivalent to approx 2.71828

You're told the initial Principal is $500, the interest rate is 3%, over 6 years. So you have everything that you need to solve the problem, just plug in the values and solve for A(6)

A(t) = P*e^(rt)
A(6) = 500 * e^(0.03 * 6)
A(6) = 500 * e^(0.18)
A(6) = 500 * 2.71828^(0.18)
A(6) = 500 * 1.19721
A(6) = 598.60861

So $500 invested 6 years ago at 3% would be worth $598.61 today.

User Yohanes
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8.2k points