Question

How much would $500 invest at 8% interest compounded continuously be worth after 3 years? Round your answer to the nearest cent.

Answer 1

Answer:

$635.62

Step-by-step explanation:

You are going to want to use the continuous compound interest formula, which is shown below.

$A = Pe^{rt}$

A = total

P = principal amount

r = interest rate (decimal)

t = time (years)

First change 8% to its decimal form:

8% -> $\frac{8}{100}$ -> 0.08

Next, plug in the values into the equation:

$A=500e^{0.08(3)}$

$A=635.62$

Your answer is $635.62