Continuously Compounded Interest is a great thing when you are earning it! Continuously compounded interest means that your
principal is constantly earning
interest and the
interest keeps earning on the interest earned!
To calculate continuously compounded interest use the
formula below. In the formula,
A represents the amount in the account
Practice Problems
Problem 1)
If you invest $1,000 at an annual interest rate of 5% compounded continuously, calculate the final amount you will have in the account after five years.
Problem 2) If you invest $500 at an annual interest rate of 10% compounded continuously, calculate the final amount you will have in the account after five years.
Problem 3) If you invest $2,000 at an annual interest rate of 13% compounded continuously, calculate the final amount you will have in the account after 20 years.
Problem 4)
If you invest $20,000 at an annual interest rate of 1% compounded continuously, calculate the final amount you will have in the account after 20 years.
