Question

Find the compound amount and the interest earned when the given investment has continuous compounding.

$11,000 at 2.3% for 8 years

Answer 1

The compound amount and the interest earned are $13,222.17 and $2,222.17 respectively.

What is compound interest?

It is defined as the interest on the principal value or deposit and the interest which is gained on the principal value in the previous year.

We can calculate the compound interest using the below formula:

$\rm A = P(1+\dfrac{r}{n})^{nt}$

Where A = Final amount

          P = Principal amount

          r  = annual rate of interest

          n = how many times interest is compounded per year

          t = How long the money is deposited or borrowed (in years)

We know the formula for continuous compounding:

$\rm A = P(e)^{rt}$

$\rm A = 11000(e)^{0.023\times8}$

A = $13,222.17

I = A - P = 13,222.17 - 11000

I  = $2,222.17

Thus, the compound amount and the interest earned are $13,222.17 and $2,222.17 respectively.

Learn more about the compound interest here:

brainly.com/question/26457073

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