Question

Find the interest earned on a $50,000 deposited for six years at 11 % interest compounded continuously.

Answer 1

Answer:

$46,739.62.

Explanation:

For an initial amount Po compounded continuously, the interest earned is calculated using the formula below:

$\begin{gathered} I=A(t)-P_0 \\ I=P_0e^{rt}-P_0 \\ I=P_0(e^{rt}-1) \end{gathered}$

Given:

• Po=$50,000

,

• t= 6 years

,

• r = 11% =0.11

We have:

$\begin{gathered} I=50000(e^{0.11\times6}-1) \\ =\ 46739.62 \end{gathered}$

The interest earned is $46,739.62.