Joaquin deposits $1,000 into an account that accrues 4% annual interest continuously compounded. What is the value of his investment after 3 years to the nearest cent?

Question

asked Oct 14, 2023 38.4k views

1 Answer

Hakan Cakirkan · Answer 1 · 2023-10-19T12:50:02+0000

Deposit: $1,000

Annual interest: 4% = 0.04

Years: 3

For this type of question, when the question asks you to "continuously compound", you use this formula:
Pe^(rt)

Solving:

$1000e^((0.04)(3)) \\1000e^(0.12) \\=1127.50$

The value of Joaquin's investment after 3 years = 1,127.50$