Problema Solution
Suppose a bank compounds interest continuously. If you invest $500 at 4% at that bank for 5 years, what will your balance be?
Answer provided by our tutors
let
P = $500 the principle
r = 4% or 0.04
t = 5 years
A = the future value
A = Pe^(r*t)
A = 500*e^(0.04*5)
e = 2.72
A = 500*2.72^(0.04*5)
A = $610.78
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after 5 years the balance will be $610.78.