Question

Suppose you invest $2000 at an annual interest rate of 5.9% compounded continuously. How much will you have in the account after 5 years? Round to the nearest hundredth.

Answer 1

Given:

Initial amount = P = $2000

Interest rate = r = 5.9% = 0.059

Time = 5 years

compounded continuously!!

So, Final Amount A is given by the formula:

`A=P\cdot e^(rt)`

Substitute with the given values:

`A=2000* e^(0.059*5)=2000* e^(0.295)=2000*1.343=2686.2527`

Rounding to the nearest hundredth

So, the answer will be $2,686.25