Answered

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A certain loan program offers an interest rate of 3%, compounded continuously. Assuming no payments are made, how much would be owed after seven years on a loan of $3100?Round your answer to the nearest cent.

Sagot :

The amount that would be owed after seven years is $3824.40

EXPLANATION

Given:

Principal(P)= 3100

rate (r) =0.03

Time (t) = 7

Using the formula below (since it is continuously compounded):

[tex]A=Pe^{rt}[/tex]

Substitute the values into the formula and evaluate.

[tex]=3100\times e^{0.03\times7}[/tex][tex]=3100\times e^{0.21}[/tex]

[tex]\approx3824.40[/tex]

Hence, the amount that will be owed is $3824.40

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