Question

A certain bank account is offering an interest rate of 2.4%. If you invest $1,500.00 today and the interest is compounded continuously, how much money will you have in 5 years? Round to the nearest cent.

Answer 1

The amount is A= 1691.238

What is interest?

Interest is the price you pay to borrow money or the cost you charge to lend money. Interest is most often reflected as an annual percentage of the amount of a loan. This percentage is known as the interest rate on the loan.

For example, a bank will pay you interest when you deposit your money in a savings account. The bank pays you to hold and use your money to invest in other transactions. Conversely, if you borrow money to pay for a large expense, the lender will charge you interest on top of the amount you borrowed.

As per given , we have

P= $1500

r= 2.4%=0.024

n= 5 years

A= ( 1+ r/365)^ 365 *n

A= 1500 ( 1+ 0.024/ 365) ^ 365 *5

A= 1500 ( 1.00006575342) ^ 1825

A= 1691.238

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