Question

use the formula below to find the value of $650 invested at 5% interest compounded continuously for 6 years

Answer 1

$877.41

Explanation:

Formula for continuous compounding interest is Pe^(rt) where P is the startign amount, e is the number e, r is the rate and t is how many years. Let's see if we have all of that.

P = 650

r = .05

t = 6

then just plug it into a calculator.

650 * e^(.05*6) = 877.41

I feel it important to mention for r if you have it in % you turn it to dcimal form by moving the decimal place left twice, or in other words devide the number by 100. and t needs to always be in years.