Question

A certain loan program offers an interest rate of 3%, compounded continuously. Assuming no payments are made, how much would be owed after seven years on a loan of $3100?Round your answer to the nearest cent.

Answer 1

The amount that would be owed after seven years is $3824.40

Step-by-step explanation

Given:

Principal(P)= 3100

rate (r) =0.03

Time (t) = 7

Using the formula below (since it is continuously compounded):

`A=Pe^(rt)`

Substitute the values into the formula and evaluate.

`=3100* e^(0.03*7)`
`=3100* e^(0.21)`

`\approx3824.40`

Hence, the amount that will be owed is $3824.40