Question

Suppose that $2700 borrowed for two years at an interest rate of 4.5% per year, compounded continuouslyFind the amount owed, assuming no payments are made until the end. not round any intermediate computations , and round your answer to the nearest cent

Answer 1

To find:

The amount owed.

Solution:

It is known that the amount owed when the money is compounding continuously at a rate of r per year for the time t years is given by:

`A=Pe^(rt)`

Here, P = 2700, r = 0.045, t = 2, so the amount is:

`\begin{gathered} A=2700e^((0.045*2)) \\ =2700e^(0.09) \\ =2700(1.094) \\ =2954.27 \end{gathered}`

Thus, the amount he owed after 2 years is $2954.27.