Question

If $1120 is invested at an interest rate of 15% per year and is compounded continuously, how much will the investment be worth in 7 years? Use the continuous

compound interest formula

Answer 1

$3,200.57

Explanation:

You are going to want to use the continuous compound interest formula, which is shown below.

`A = Pe^(rt)`

A = total

P = principal amount

r = interest rate (decimal)

t = time (years)

First change 15% to its decimal form:

15% ->
`(15)/(100)` -> 0.15

Next, plug in the values into the equation:

`A=1,120e^(0.15(7))`

`A=3,200.57`

The investment will be worth $3,200.57 in 7 years.