Question

You deposit $10,000 in an account that pays 6% annual interest compounded continuously.Find the balance of the account after 10 years .

Answer 1

We can calculate the future value when the interest is compound continously as:

`FV=PV\cdot e^(rt)`

where r is the annual rate of interest, and t the nunmber of periods (years).

Then, for r=0.06, t=10 and PV=10,000, we have:

`FV=10,000\cdot e^(0.06\cdot10)=10,000\cdot e^(0.6)\approx10,000\cdot1.8221=18,221`

The