Question

Steve invests 1,800 in an account that earns 3.7% annual interest, compounded continuously. What is the value of the account after 10 years? Round your answer to the nearest dollar.

Answer 1

Answer: the value of the account after 10 years is $2606

Step-by-step explanation:

The formula for continuously compounded interest is

A = P x e (r x t)

Where

A represents the future value of the investment after t years.

P represents the present value or initial amount invested

r represents the interest rate

t represents the time in years for which the investment was made.

e is the mathematical constant approximated as 2.7183.

From the information given,

P = 1800

r = 3.7% = 3.7/100 = 0.037

t = 10 years

Therefore,

A = 1800 x 2.7183^(0.037 x 10)

A = 1800 x 2.7183^(0.37)

A = $2606 to the nearest dollar