Question

How much would $500 invest at 8% interest compounded continuously be worth after 3 years? Round your answer to the nearest cent.

Answer 1

$635.62

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 8% to its decimal form:

8% ->
`(8)/(100)` -> 0.08

Next, plug in the values into the equation:

`A=500e^(0.08(3))`

`A=635.62`

Your answer is $635.62