Asked Feb 3, 2019

How much will $100 grow to if invested at a continuously compounded interest rate of 10.5% for 7 years?


Expert Answer

Step 1

Principal, P = $ 100

Time period, T = 7 years

Continuously compounded interest rate, R = 10.5%

Step 2

Maturity Amount, A under continuously compounding interest rate is given by:

A = P x eRT, where symbols have meanings explained above.

Step 3

Applying this formula to our case,

A = 100 x e10.5% x 7 = 1...


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