Given:
Investment = $8500
Rate of interest = 5.0%
Time = 5 years
Compounded continuously
To find:
The value of investment after 5 years.
Solution:
Rate = 5.0%
[tex]=\frac{5}{100}[/tex]
Rate = 0.05
Compound interest formula if interest compounded continuously:
[tex]A = P e^{rt}[/tex]
where P is the investment and r is the rate and t is the time.
[tex]A = 8500 \times e^{0.05 \times 5}[/tex]
[tex]A = 8500 \times e^{0.25}[/tex]
The value of [tex]e^{0.25}=1.284025[/tex].
[tex]A = 8500 \times 1.284025[/tex]
[tex]A=10914.21[/tex]
The value of the investment after 5 years is $10914.21.
