Problems for

Continuously
Compounded Interest
Engr. Antonio Carmelito Lizada
If you invest $1,000 at an annual interest
rate of 5% compounded continuously,
calculate the final amount you will have in
the account after five years.

Problem
 𝐹= 𝑃𝑒 𝑟𝑛
0.05(5)
𝐹 = 1000𝑒
𝐹 = 1284.02

Solution
If you invest $500 at an annual interest
rate of 10% compounded continuously,
calculate the final amount you will have in
the account after five years.

Problem
 𝐹= 𝑃𝑒 𝑟𝑛
0.1(5)
𝐹 = 500𝑒
𝐹 = 824.36

Solution
If you invest $2,000 at an annual interest
rate of 13% compounded continuously,
calculate the final amount you will have in
the account after 20 years.

Problem
 𝐹= 𝑃𝑒 𝑟𝑛
0.13(20)
𝐹 = 2000𝑒
𝐹 = 26,927.47

Solution
If you invest P at an annual interest rate of
r compounded continuously, calculate the
rate of interest if the final amount in the
account triples after 10years.

Problem
 𝑟
𝐹= 𝑃𝑒
F = 𝑃𝑒 𝑟(10)
𝑟(10)
3P = 𝑃𝑒
r = 10.99%

Solution
If you invest P at an annual interest rate of
5% compounded continuously, how many
years will it take to make it 4 times the
invested value?

Problem
 𝑟𝑛
𝐹= 𝑃𝑒
F = 𝑃𝑒 0.05(𝑛)
0.05(𝑛)
4P = 𝑃𝑒
𝑛 = 27.73 𝑦𝑒𝑎𝑟𝑠

Solution