Question

how much would $500 invested at 6% interest compounded continuously be worth after 4 years? round your answer to the nearest cent

Answer 1

A=500×e^(0.06×4)
A=635.62

Answer 2

It would be $ 635.62.

Explanation:

Since, when an amount is increasing compound continuously,

Then the amount after t years,

`A=Pe^(rt)`

Where P is the principal amount,

r is the annual rate,

Here, P = $ 500,

r = 6 % = 0.06,

t = 4 years,

Thus, the amount after 4 years,

`A=500 e^(0.06* 4)`

`=500 e^(0.24)`

`=\$ 635.624575161\approx \$ 635.62`

Hence, $500 would be $ 635.62 after 4 years with the rate of 6% compounded continuously.