$2,500 is deposited into an account that earns 3.5% interest compounded continuously. No other deposits or withdrawals are made. How much money is in the account after 6 years?

Question

a) $3,073.14

b) $3,084.20

c) $15,133.61

d) $20,415.42

Answer 1

The continuous compound formula is as the initial investment*e^rate.

Here the initial deposit is 2500 and rate is 0.035. So after the first year, you would have 2589.05. That is then used as the initial balance for the following year. Done 6 times, the effect is 2500(e^.035)^6 = 3084.20