Question

What is the compound interest if $134,000 is invested for 2 years at 7% compounded continuously.The interest is $. (Round to 2 decimal places.)

Answer 1

For a initial amount invested P at an annual interest rate r, after t years the total amount will be:

`T=P\cdot(1+r)^t`

Then, the interest is given by:

`I=T-P`

For P = $134,000, t = 2 years and r = 7%, we have:

`\begin{gathered} T=134000\cdot(1+0.07)^2 \\ T=\text{ \$153,416.60} \\ I=T-P=153,416.60-134,000=\text{ \$19,416.60} \end{gathered}`