Question

Suppose your great-great grandfather invested $900 earning 4.5% interest compounded continuously 100 years ago. Howwould his investment be worth today?

Answer 1

Answer;

$73,429.67

Explanations:

The formula for calculating compound amount is expressed according to the formula;

$A=P(1+\frac{r}{n})^{nt}$

P is the principal (money invested) = $900

r is the rate (in decimal) = 4.5% = 0.045

t is the time (in years) = 100 years

n is the compounding time = 1

Substituting the given parameters into the formula;

$\begin{gathered} A=900(1+\frac{0.045}{1})^{100(1)^{}} \\ A=900(1+0.045)^{100_{}} \\ A=900(1.045)^{100} \\ A=900(81.5885) \\ A=\ 73,429.67 \end{gathered}$

Hence the investment will be worth $73,429.67 today if compounded continuously