Question

Suppose you invest $2000 at an annual interest rate of 5.9% compounded continuously. How much will you have in the account after 5 years? Round to the nearest hundredth.

Answer 1

Given:

Initial amount = P = $2000

Interest rate = r = 5.9% = 0.059

Time = 5 years

compounded continuously!!

So, Final Amount A is given by the formula:

$A=P\cdot e^{rt}$

Substitute with the given values:

$A=2000\times e^{0.059\times5}=2000\times e^{0.295}=2000\times1.343=2686.2527$

Rounding to the nearest hundredth

So, the answer will be $2,686.25