SOLUTION: If interest is compounded continuously at 4.5% for 7 years, how much will a $2000 investment be worth at the end of 7 years?
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Question 888950: If interest is compounded continuously at 4.5% for 7 years, how much will a $2000 investment be worth at the end of 7 years?
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
the continuous compounding formula is f = p * e^(i*t)
p is the present value
f is the future value
i is the interest rate per time period.
t is the number of time periods.
in your problem:
p = 2000
t = 7 years
i = .045 per year (percent / 100 = rate)
e = scientific constant of 2.718281828...
formula becomes:
f = 2000 * e^(.045*7) which becomes:
f = 22740.518622
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