22. Compounding Continuously

Front

What is the decimal equivalent of 2%?

Back

0.02

Front

What is the formula for continuous compounding?

Back

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

Front

If Nick deposits $20,000 at a continuous compounding rate of 2.5% for 4 years, what will he have?

Back

$22,103.42

Front

How much will Damara have after investing $3,500 at 2% compounded continuously for 5 years?

Back

$3,868.10

Front

If Ashleigh has $3,567.91 after 10 years at 4.5% compounded continuously, how much did she start with?

Back

$2,275

Front

What does 'semi-annually' mean in terms of compounding frequency?

Back

Compounding occurs 2 times a year.

Front

What is the value of e (Euler's number) approximately?

Back

e ≈ 2.71828

Front

How do you calculate the amount after continuous compounding?

Back

Use the formula A = Pe^(rt).

Front

What is the principal amount in the formula A = Pe^(rt)?

Back

The principal amount (P) is the initial sum of money invested or deposited.

Front

What does the variable 'r' represent in the continuous compounding formula?

Back

The variable 'r' represents the annual interest rate (as a decimal).