Question

You invest $500 in an account that pays 6% interest compounded continuously. How
much will be in the account after 6 years?

Answer 1

Answer:  716.66 dollars

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Explanation:

We'll apply this formula

A = P*e^(r*t)

where,

• A = account balance after t years
• P = initial deposit, aka principal
• e = special constant roughly equal to 2.718 but it goes on forever without a pattern; it's better to let the calculator handle this value rather than type the decimal digits in.
• r = annual interest rate in decimal form
• t = number of years

In this case, we have

• P = 500
• r = 0.06
• t = 6

Again we won't type "2.718..." for 'e', and we'll just type it into the calculator as shown below. That way the calculator can handle the digits instead.

So...

A = P*e^(r*t)

A = 500*e^(0.06*6)

A = 716.66470728026

A = 716.66 dollars is the final answer