Question

In initial amount of $2500 is invested in an account at an interest rate of 6.5% per year, compounded continuously. Assuming that no withdrawals are made, find the amount in the account after four years. Round your answer to the nearest cent.

Answer 1

For a continuous compound interest we can use the formula:

`A=Pe^(rt)`

for the total amoun after t years. In this formula P is the principal (the initial investment), r is the interest rate in decimal form and t is the time, as we said, is the number of years. Plugging the values given we have:

`A=2500e^(0.065\cdot4)=3242.33`

Therefore after four years the account will have $3242.33