Question

you deposit $1500 in an account that pays 5% annual interest compounded continuously what is the balance after 6 years.

Answer 1

Hello kiddio lets figure this out!

The formula for simple interest is I = P*R*T where I = interest, P = Principal (original amount), R is the rate as a decimal, and T is time in years.  So I = 1500*(.05)*6 = 1500*(0.30) = $450.  The total amount you have after 6 years is the amount you started with ($1500) plus the interest ($450) which is $1950.   The formula for yearly compounding is  A = P(1 + r)t   where   A = Accumulated or final amount  P = Principal ($1500) r = interest rate as a decimal (0.05)t = time (6 years)   A = 1500*(1 + 0.05)6 = 1500*(1.05)6 = $2010.14  

Have a nice day