How much would 500.00 compounded continuously at 4 percent be worth at 7 years?

Answer 1

Unfortunately, that's not an "easy" question to answer any longer.

If you were using what they used to call "Simple Interest", then it would be 4% each year.... so

$500 + 4% year 1 = $520

$520 + 4% year 2 = $540.80

$540.80 + 4% year 3 = $562.43

$562.43 + 4% year 4 = $584.92

$584.92 + 4% year 5= $608.32

$608.32 + 4% year 6 = $632.65

$632.65 + 4% year 7 = $657.96

However, if you use a compound interest calculator, then you would use this formula:

A = P(1+ r/n)^nt

Where P = Principal

r = Annual interest rate

n = number of times the interest is compounded per year

t = number of years

So.... $500 at 4% compounded daily would work to:

A = 500(1+.04/365)^365*7

A = 500(1+.04/365)^2555

A = 500(1.00010958904109589041095890410958904)^2555

A = 500(1.3231095139022953872398959866383)

A = 661.56

(Thanks to my wife the banker for verifying this for me)