Suppose you deposit $1,500 in an account with an annual interest rate of 9% compounded continuously. How much money would the account contain after 5 years.

Question

Quizplus · Accepted Answer

The formula for continuous compounding is $A = Pe^{rt}$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount (the initial amount of money), $r$ is the annual interest rate (decimal), and $t$ is the time the money is deposited for in years. Plugging in the given values: $A = 1500e^{0.09*5} = 1500e^{0.45} ≈ \$2,352.47$.

Suppose You Deposit $1,500 in an Account with an Annual