Question

Suppose that $3700 is borrowed for seven years at an interest rate of 2.5% per year, compounded continuously. Find the amount owed, assuming nopayments are made until the end.Do not round any intermediate computations, and round your answer to the nearest cent.

Answer 1

Using the formula for continuously compound interest we get:

`M=3700(e)^(0.025\cdot7)=3700e^(0.175)=4407.61`

Therefore, the total amount owed is $4407.61.