Question

Find the balance in the account after 10 years if $2000 is deposited at a rate of 7.5% interest rate compounded continuously.

Answer 1

Explanation:

The formula for continuously compounded interest is expressed as

FV = PV x e (i x t)

where

FV represents the future value of the investment.

PV represents the present value of the investment.

i represents the stated interest rate, t represents time in years,

e is the mathematical constant approximated as 2.7183

From the information given,

t = 10 years

I = 7.5% = 7.5/100 = 0.075

PV = 2000

Therefore

FV = 2000 x 2.7183 (0.075 x 10)

FV = $4234