Question

You invest $500 in an account with an annual interest rate of 1.1%, compounded continuously. How much money is in the account after 10 years?

Answer 1

For continuous compounding, the formula is:

`A=Pe^(rt)`
where e is the base of natural logs.

`A=500*e^(0.011*10)=558.14`
So the amount after 10 years is $558.14

Answer 2

A=P(1+
`(r)/(100) )^(n)`
A=500(1+
`(1.1)/(100) )^(10)`
A=500(1.011
`)^(10)`
A=500(1.1156)
A=557.80