Financial Formula

Question

How much money will be in an account if $2500 earns 2.19 % interest, compounded continuously, for 2 years

Answer 1

The formula for continuous compounding is:

P(t) = P_0·e^rt

• P(t) = principle at time t
• P₀ = initial principle = $2500
• r = rate expressed as a decimal = 2.19% = 0.0219
• t = years = 2

 

Plug in the numbers and compute the answer.