Question

How much would $500 invested at 8% interest compounded continuously be worth after 3 years? round your answer to the nearest cent?

Answer 1

To solve this, you'll need the interest formula: P(1 + rt).

Then, plug in the numbers:
$500(1.08*3) = $1,620. That's your answer.

Answer 2

It would be worth $635,62.

Explanation:

The amount that you will have saved after t years is given by the following equation.

`P(t) = P(0)e^(rt)`

In which P(t) is the amount after t years, P(0) is the initial amount invested and r is the interest rate, as a decimal.

In this problem, we have that:

`P(0) = 500, r = 0.08, t = 3`

So

`P(t) = P(0)e^(rt)`

`P(t) = 500e^(0.08*3)`

`P(t) = 635.62`

It would be worth $635,62.