Question

How much will $100 grow to if invested at a continuously compounded interest rate of 10% for 8 years?

Answer 1

It will grow to $222.55.

Explanation:

The formula for continuosly compounded money quantities is:

`F = Pe^(rt)`

In which F is the final amount, that is, to how much the money grows, P is the initial deposit, r is the interest rate, as a decimal, and t is the time, in years.

In this problem, we have that:

`P = 100, r = 0.1, t = 8`

So

`F = Pe^(rt)`

`F = 100e^(0.1*8)`

`F = 222.55`

It will grow to $222.55.