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Use the compound interest formula to determine the final value of the given amount.

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3 Answers

Use the compound interest formula to determine the final value of $1800 at 7% compounded continuously for 6 years.
  • The formula for continuous compound interest is A = Pert, where
    • A = Amount after the given time
    • P = Principal (initial investment)
    • e = natural number (approx. 2.7183)
    • r = interest rate (as a decimal)
    • t = number of years
P = $1800, r = 0.07, t = 6
A = Pert
A = (1800)e(0.07)(6)
A = 1800e0.42
A = 2739.53
 
The final value is $2,739.53
$1800 at 7% compounded continuously for 6 years?
 
A = 1800e^(0.07*6) = $2739.53
 A = P ( 1 + r ) ^n
 
 A = 1800 * ( 1 + 0.07) ^ 6 =
 
     = 1800 * ( 1.07) ^6 = 2701.31 

Comments

Continuously require A = Pert

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