Question

Find the amount that results from investing $5000 at 3% compounded continuously for 5 years. Round your

answer to two decimal places.

Answer 1

The amount that results from investing $5000 at 3% compounded continuously for 5 years is $5800

Explanation:

We are given:

Principal Amount (P) = $5000

Years (t) = 5

Rate (r) = 3% or 0.03

We need to find New Amount (A)

The formula used is:
`A=P(1+(r)/(n))^(nt)`

Since amount is compounded continuously so n=1

Putting values and finding A

`A=P(1+(r)/(n))^(nt)\\A=5000(1+(0.03)/(1))^(1*5)\\A=5000(1+0.03)^5\\A=5000(1.03)^5\\A=5000(1.16)\\A=5800`

So, New Amount (A) = $5800

The amount that results from investing $5000 at 3% compounded continuously for 5 years is $5800