How do you compound interest continuously? ?

The question states the interest is compounded annually. We have to use the given formula for this.

Principal Amount = P = $500
Interest Rate = r = 6% = 0.06
Time in years = t = 12
Compounding periods in a year = n = 1

Using the values in the given formula we get:



Thus, rounding to nearest cent the answer to this question is 1006.10

However, if you are also interested in finding the compound interest that is compounded continuously, use the following formula:

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