Given:
The principal amount = $8806.54
Rate of interest = 4%
Time = 7 years
Required:
Find the future value when interest is compounded continuously.
Explanation:
The future value is calculated by using the formula:
[tex]Future\text{ value = Ae}^{rt}[/tex]Where A = amount
r = rate of interest
t = time period
Substitute the given values in the formula:
[tex]\begin{gathered} Future\text{ value = 8806.54\lparen e}^{0.04\times7}) \\ =8806.54(e^{0.28}) \\ =8806.54\times1.323 \\ =11,651.0524 \\ \approx11,651.05 \end{gathered}[/tex]Interest = 11,651.05 - 8806.54
= 2844.51
Final Answer:
The future value when interest is compounded continuously is approximately $11,651.05.
The earned interest is approximately $2844.51
