Continuously Compounded Interest

Front

What does the 'r' stand for in the continuously compounded interest formula?

Back

Rate as a decimal.

Front

If $1,000 is invested at 16% interest, compounded continuously, for five years, what is the ending balance?

Back

$2,225.54.

Front

What does the 't' stand for in the continuously compounded interest formula?

Back

Time in years.

Front

Convert 3.5% to a decimal.

Back

.035.

Front

Damara invests $3500 at 2% compounded continuously for 5 years. How much will she have in her account after 5 years?

Back

$3,868.10.

Front

What is the formula for continuously compounded interest?

Back

A = Pe^(rt), where A is the amount, P is the principal, r is the rate, and t is the time.

Front

How do you convert a percentage to a decimal?

Back

Divide the percentage by 100.

Front

What is the principal in the context of continuously compounded interest?

Back

The initial amount of money invested or loaned.

Front

What does 'e' represent in the formula A = Pe^(rt)?

Back

The base of the natural logarithm, approximately equal to 2.71828.

Front

If the interest rate is 5%, what is 'r' in decimal form?

Back

.05.