If $625 is invested at an interest rate of 7% per year and is compounded continuously, how much will the investment be worth in 12 years? Use the continuous compound interest formula: A = Pert.
Answers
Answer:
1407.61
Step-by-step explanation:
Since the amount is compounded continuously we need to get the force of interest.
The formula for getting the force of interest is given by :
r = ln(1 + i)
From the question :
i = 7%
Therefore :
r = ln (1.07)
r = 0.067658
r = 6.7658%
From the formula :
A = Pert
Where :
A = Total amount in the end
P = Principle amount
r = force of interest
t = Period in years.
Doing the substitution we have :
A = 625 × e(0.067658 × 12)
A = 625 × e(0.81190)
A = 1407.61
The investment will be worth $ 1407.61.
Answer:
$1406.25
Step-by-step explanation:
principle (Amount invested) P = $ 625
Rate of interest R = 7 % per annum
Time (n) = 12 Years
A = Amount after 12 years
A = P (1 + R/100)ⁿ
=> A = 625 ( 1 + 7/100)¹²
=> A = 625 ( 1.07)¹²
=> A = 625 * (2.25)
=> A = 1406.25
=> A = $1406.25