Question

If you invest $200 into a savings account that earns 4% annual interest compounded continuously, how much money will you have after 21 years?

Answer 1

$455.75

Explanation:

• Formula for compound interest:End amount = Starting amount x (1 + interest in decimal form)^length of time in years

• Starting amount: $200
• Interest rate as a decimal: 0.04 (4%/100)
• Length of time: 21 years

End amount = 200.00(1 + 0.04)^(21) = $455.75

Answer 2

To calculate daily compound interest, the interest rate will be divided by 365, and the number of years (n) will be multiplied by 365.