A certain loan program offers an interest rate of 3.5% per year, compounded continuously. Assuming no payments are made, how much would be owed after four years on a loan of \$1900? Do not round any intermediate computations, and round your answer to the nearest cent.

Solution

A cer t ain l o an p ro g r am o ff ers an in t eres t r a t e o f 3.5% p er ye a r, co m p o u n d e d co n t in u o u s l y . A ss u min g n o p a y m e n t s a re ma d e, h o w m u c h w o u l d b e o w e d a f t er f o u r ye a rs o n a l o an o f $1900 ? Do n o t ro u n d an y in t er m e d ia t e co m p u t a t i o n s, an d ro u n d yo u r an s w er t o t h e n e a res t ce n t .

Amount : 2185.52

Solution steps

Translate the problem into an equation:

A = 1900 e^{0.035 \cdot 4}

1900 e^{0.035 \cdot 4} = 2185.52021 \dots

Round to the nearest hundredth:

2185.52

Amount : 2185.52