Question

What is the accumulated value if the money is compounded continuously?

Answer 1

Given: An investment of $20000 for 6 years at an interest rate of 5.5%.

Required: To determine the accumulated value if the money is compounded continuously.

Explanation: The formula for continuous compound interest is-

`A=Pe^(rt)`

Here,

`\begin{gathered} P=20000 \\ t=6 \\ r=0.055 \end{gathered}`

Substituting the values into the formula as follows-

`\begin{gathered} A=20000e^(0.055*6) \\ \end{gathered}`

Further solving-

`A=27819.36`

Final Answer: The accumulated value of the money is $27819.36