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Math Help - Compounded intrest continuously

  1. #1
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    Question Compounded intrest continuously

    Suppose an investor deposits $4,000 in an account bearing 2.5% intrest compounded continuously. Find the total amount in the account for the following time period.

    29 years

    The total amount of money is=?

    I am not asking for the answer, I just want to know if I need to know how to get the answer....do I multiply the 2.5 by 29 then divide? I can't figure out how to set it up???? Please help. Thanks
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  2. #2
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    You should be studying the formulas for compound interest if you are given this sort of problem. It isn't something students usually can derive on their own. When the interest in compounded continuously, than the number "e" comes into play and the formula for calculating the total value after t-time is:

    P=P_{0}e^{rt}

    Look familiar?
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  3. #3
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    Unhappy compounded

    It does, and i understand the formula. What I did not know was that I was able to plug that into my calculator. Unfortunatly I do not have the e on the calculator I am using. So that brings me to my next question. Am I screwed because I do not have that capability???
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  4. #4
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    Quote Originally Posted by tpoma View Post
    It does, and i understand the formula. What I did not know was that I was able to plug that into my calculator. Unfortunatly I do not have the e on the calculator I am using. So that brings me to my next question. Am I screwed because I do not have that capability???
    Really? Have you tried looking near the ln key - it might be shift+ln for example. On my Casio fx-85ES is it
    Code:
    
    
    
    
    
    Alpha \rightarrow \text { x }10^x
    Alternatively google has a calculator function: below is my search for e.

    http://www.google.co.uk/search?hl=en...G=Search&meta=
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  5. #5
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    Wink

    I found it with some help of course. Thank you so much for you help!!
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