Question

6. Katie invested $1600 at a rate of 1.4% per year compounded continuously. How much will she have after 12 years? Round to the nearest cent (hundredth place).​

Answer 1

Answer:

$1890.49 (to the nearest cent)

Step-by-step explanation:

Compound interest is based on the principal amount and the interest that accumulates on it in every period.

Compound Interest = P (1 + r)^n

where P = principal amount, r = annual interest rate (as a decimal), n = term, in years​

So for this problem:

P = 1600

r = 1.4 ÷ 100 = 0.014

n = 12

Therefore,  

Compound Interest = P (1 + r)^n

                                 = 1600 x (1 + 0.014)^12

                                 = 1600 x (1.014)^12

                                 = 1890.494606...

                                 = $1890.49 (to the nearest cent)