Question

If $396 is invested at an interest rate of 13% per year and is compounded continuously, how much will the investment be worth in 3 years?

Use the continuous compound interest formula: A = Pert

Answer 1

Answer:

$A=\ 584.88$  

Step-by-step explanation:

we know that

The formula to calculate continuously compounded interest is equal to

$A=P(e)^{rt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest in decimal  

t is Number of Time Periods  

e is the mathematical constant number

we have  

$t=3\ years\\ P=\ 396\\ r=0.13$  

substitute in the formula above  

$A=\ 396(e)^{0.13*3}=\ 584.88$  

Answer 2

Answer:

$584.88

Step-by-step explanation:

If $396 is invested at an interest rate of 13% per year and is compounded continuously in 3 years.

Formula of continuous compound interest : $A=Pe^{rt}$

Where

A = Future Amount

P = Principal amount ( $396.00 )

r = rate of interest 13% ( 0.13 )

t = time in years (3 years)

Now put the values in the formula

$A=396e^{0.13\times 3}$

$A=396(2.718282^{0.39})$

= 396 (1.476981)

= 584.884394 ≈ 584.88

The amount after 3 years would be $584.88