Question

How much would $500 invested at 8% interest compounded continuously be worth after 3 years? Round your answer to the nearest cent. A.$641.28B.$629.86C.$635.61D.$620.00

Answer 1

Given that

The formula is

`\begin{gathered} A(t)=P.e^(rt) \\ where\text{ r = rate of interest and t = time} \end{gathered}`

Also, the rate at which $500 is invested for 3 years is 8%.

Explanation -

The rate 8% can be changed to decimal as

R=8% = 8/100 = 0.08

On substituting the values we have the amount as

`A=500* e^(0.08*3)=500* e^(0.24)=500*1.27124915=635.61`

So option C is correct.

And the final answer is $635.61