If $500 were to compound continuously at a yearly interest rate of 7%, what would the total amount be after 10 years?

Answer 1

Hi Sienna,

The problem mentions that the money is compounded continuously. That mean you have to use the "PERT" formula:

Final amount = P*e^rt

where P = principal (original amount), r = annual interest rate and t = time

In this problem: P is $500, r = 7/100 = 0.07 and t = 10

Plug those numbers in the formula: final amount = 500 *e^0.07*10

Let the calculator do the work for you and it should give you an answer of $1006.88.