Question

Some banks now use continuous compounding of an amount invested. In this case, the equation that models the value of an initial investment of P dollars in t years at an annual interest rate of r is given by

A = Pe^rt. Using this equation, find the value in 5 years of an investment of $2000 that earns 7% annual interest.

Answer 1

9514 1404 393

Answer:

$2838.14

Explanation:

Fill in the values and do the arithmetic.

A = 2000e^(0.07·5)

A = 2000e^0.35 ≈ 2838.14

The value of the investment in 5 years will be $2838.14.