Question

60.April would like to invest $200 in the bank for one year. Three banks all have a nominal APR of 1.5%, but compound the interest differently.
c. Bank C compounds interest continuously. What would April’s balance be after one year with this bank?

Answer 1

Answer:

$203.02

Step-by-step explanation:

Since the bank in question compounds interest continuously, the following equation should be used to determine the final balance (B) in April's account:

$B= 200*e^{i*t}$

Where "e" is a mathematical constant approximated as 2.7183, "i" is the interest rate (1.5%) and "t" is the investment time in years (1):

$B= 200*e^{0.015*1}$

$B= 203.02$

April's balance would be $203.02 after one year.