Question

If you invest $1500 at a 7% interest rate compounded continuously for five years, how much money will you have after five years? Round to the nearest cent.

Answer 1

For this question, we use the compound interest formula:

`M=M_0(1+i)^t`

where M_0 is the initial amount, i is the interest and t is the number of times the interest is applied. Substituting M_0=$1500, t=5, and i=0.07 we get:

`M=1500(1+0.07)^5\approx1500\cdot1.102551\approx2103.83`