Question

If $396 is invested at an interest rate of 13% per year and is compounded continuously, how much will the investment be worth in 3 years?Use the continuous compound interest formula: A = Pert(PE rt are expoent to the PE)

Answer 1

The formula is given by:

`A=Pe^(rt)`

Where

`\begin{gathered} P=\text{ the initial amount} \\ A=\text{the final amount} \\ r=\text{ the rate of interest} \\ t=\text{ time} \end{gathered}`

In this case,

`\begin{gathered} r=13\%=0.13,P=\$396,t=3 \\ \text{ Therefore,} \\ A=396\cdot e^(0.13\cdot3)\approx\$584.88 \end{gathered}`

Therefore, the investment will be worth $584.88 after 3 years.

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