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A certain loan program offers an interest rate of 9%, compounded continuously. Assuming no payments are made, how much would be owed after fiveyears on a loan of $2600?Do not round any intermediate computations, and round your answer to the nearest cent.

Respuesta :

For this problem we use the continuously compounded interest formula:

[tex]M=M_0e^{rt}[/tex]

where M_0 is the initial amount, r is the interest rate and t is the number of years. Substituting M_0=$2600, r=0.09, and t=5 we get:

[tex]M=2600e^{0.09\cdot5}=2600e^{0.45}=4077.61[/tex]

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