Question

Suppose that $3900 is borrowed for four years at an interest rate of 3% per year, compounded continuously. Find the amount owed, assuming no payments are made until the end.

Do not round any intermediate computations, and round your answer to the nearest cent.

Answer 1

To find the amount owed at the end of four years at 3% interest compounded continuously, you can use the formula A = P * e^(rt), where A is the amount owed, P is the principal amount borrowed, e is the base of the natural logarithm, r is the interest rate, and t is the time in years. Using this formula, the amount owed at the end is approximately $4263.79.

Step-by-step explanation:

To find the amount owed at the end of four years at 3% interest compounded continuously, we can use the formula A = P * e^(rt), where A is the amount owed, P is the principal amount borrowed, e is the base of the natural logarithm, r is the interest rate, and t is the time in years. Using this formula, we have A = $3900 * e^(0.03 * 4). Plugging in the values, we find A ≈ $4263.79. Therefore, the amount owed at the end is approximately $4263.79.