Question

An investment of $15,300.00 earns 2.6% annual interest, compounded continuously. If no funds are

added or removed from this account, what is the future value of the investment after 35 years?
Round your answer to the nearest penny.

Answer 1

Explanation:

The formula for continuously compounded interest is

A = P x e (r x t)

Where

A represents the future value of the investment after t years.

P represents the present value or initial amount invested

r represents the interest rate

t represents the time in years for which the investment was made.

e is the mathematical constant approximated as 2.7183.

From the information given,

P = 15300

r = 2.6% = 2.6/100 = 0.026

t = 35 years

Therefore,

A = 15300 x 2.7183^(0.026 x 35)

A = 15300 x 2.7183^0.91

A = $38010.4