Question

If you invest $5,000 dollars in an account that will 6.5% compounded continuously , how much will it be worth after 8 years?

Answer 1

It is given that an amount of $5000 is componded continuously for 8 years at 6.5%.

So the amount is given by the formula:

`A=P(1+(r)/(100k))^(kn)`

Where k is the number of compounding periods in a year, r is the annual rate of interest and n is the number of years.

Here:

`r=6.5,k=365,n=8,P=5000`

Substitute the values to get:

`A=5000(1+(6.5)/(100*365))^(365*8)=8409.7489`

Hence in 8 years the amount will be $8409.7489.