$600 is deposited in an account that pays 7% annual interest, compounded continuously. What is the balance after 5 years?

1 Answer
Mar 2, 2018

$841.80

Explanation:

Compound Interest Formula:

A=P(1+r/n)^(nt),

where A is the compound interest

where P is the amount deposited ($600)

where r is the rate (7%)

where n is the number of times it is compounded in one year (1)

where t is the number of years (5)

Now, we can substitute the values:

A=600(1+7/(100*1))^(1*5)

A=600(1+0.07)^5

A=600 * (1.07)^5

A=600 * 1.403

A=$841.80

And there we have our answer.