SOLUTION: If a bank compounds continuous, then the formula becomes simpler, that is A=Pe^rt where e is a constant and equals approximately 2.7183. Calculate A with continuous compounding.

Question 38399: If a bank compounds continuous, then the formula becomes simpler, that is A=Pe^rt where e is a constant and equals approximately 2.7183. Calculate A with continuous compounding. Use 20,000 at for 3 years at a rate of 8 percent.
This is what I have so far:
A= 20,000e^.08*2
A= 20,000e^.16
= ?
I am lost as to finding the answer, I don't understand what to do with e. Could you please help me? Thanks, Christine
Found 2 solutions by fractalier, Nate:
Answer by fractalier(6550) (Show Source): You can put this solution on YOUR website!
Okay from
A=Pe^rt
we plug in what we know (using three years)
A = 20000(e^(.08*3))
A = 20000e^.24
Now use your calculator to evaluate e^.24 as 1.271, then multiply it by 20000 to get the final answer
A = $25424.98
Answer by Nate(3500) (Show Source): You can put this solution on YOUR website!
If a bank compounds continuous, then the formula becomes simpler, that is A=Pe^rt where e is a constant and equals approximately 2.7183. Calculate A with continuous compounding. Use 20,000 at for 3 years at a rate of 8 percent.
Actually, your form should look like this:

On your calculator, you would have a little 'e' to the 'x'. For graphing calculators they can have just the little 'e'. It should be located as 2nd then LN button. Next, hit the carrot sign (^). This means to a power. So, 'e' then ^ then .24 .... last, multiply by 20,000.
'A' should be about $25,424.98
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