Question

$1000 is deposited in an account with a

8.5% interest rate, compounded
continuously.
What is the balance after 5 years?
P = $1000 r = 0.085 t = 5
F = Pet F = $[?]
Round to the nearest cent.

Answer 1

$1529.59

Explanation:

You want the balance in an account earning 8.5% interest compounded continuously for 5 years if the initial balance was $1000.

Continuous compounding

The formula for the account balance is given as ...

F = P·e^(rt)

F = 1000·e^(0.085·5) ≈ 1529.59

The balance after 5 years is $1529.59.

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