Question

Connor borrows $8,000 at a rate of 19% interest per year. What is the amount due at the end of 7 years if the interest is compounded continuously?

$14,576.95
$29,215.37
$30,248.35
$43,791.58

Which one is it and how did you get it?

Answer 1

`\$30,248.35`

Explanation:

we know that

The formula to calculate continuously compounded interest is equal to

`A=P(e)^(rt)`

where

A is the Final Amount due

P is the amount of money borrowed

r is the rate of interest in decimal

t is Number of Time Periods

e is the mathematical constant number

we have

`t=7\ years\\ P=\$8,000\\ r=19\%=19/100=0.19`

substitute in the formula above

`A=8,000(e)^(0.19*7)`

`A=8,000(e)^(1.33)`

`A=\$30,248.35`