Question

Allen and Ben both open new bank accounts with an initial

deposit of $500.00. Allen's account earns 4% interest compounded

monthly, while Ben's account earns 2% interest compounded

continuously. To the nearest cent, how much will be in Ben's

account after 4 years?

Answer 1

Use Continuous Compound Interest Formula:
A = Pe^rt
A = Future Amount
P = Initial Amount
r = Interest rate
t = Time

%2 = 2/100
= 0.02

A = 500.00e^(0.02)(4)
A = 541.6435338

Round to nearest cent:
A ≈ 541.64 -> Final Answer.