Question

Bank of America offers a 5-year 8% continuously compounded investment option.

Find the amount accrued if $1450 is invested.

Answer 1

A = $2130.49

Explanation:

Given the following data;

Time, t = 5 years

Interest rate, r = 8%

Principal = $1450

To find the future value, we would use the compound interest formula;

`A = P(1 + (r)/(100))^(t)`

Where;

A is the future value.

P is the principal or starting amount.

r is annual interest rate.

t is the number of years for the compound interest.

Substituting into the equation, we have;

`A = 1450(1 + (8)/(100))^(5)`

`A = 1450(1 + 0.08)^(5)`

`A = 1450(1.08)^(5)`

`A = 1450 * 1.4693`

A = $2130.49