Question

Suppose you invest $2500 at an annual interest rate of 3% compounded continuously. How much will you have in the account after 7 years? Round the solution to the nearest dollar.

Answer 1

P = $2500, n = 7, r = 3% = 0.03
F = P / ( 1 + r ) ^t
F = $2500 * 1.03^(7) = $2500 * 1.22987 = $3074.68 = $3075

Answer 2

$3084

Explanation:

The principle amount, P = $2500

Interest rate = 3% = 0.03

t = 7 years.

The formula for compounded continuously is given by

`A=Pe^(rt)`

Substituting the known values, we get

`A=2500e^(0.03\cdot7)`

On simplifying, we get

`A=\$3084.195`

Therefore, the amount after 7 years in $3084