A certain loan program offers an interest rate of

7%
, compounded continuously. Assuming no payments are made, how much would be owed after four years on a loan of
$3700
?

Do not round any intermediate computations, and round your answer to the nearest cent.
If necessary, refer to the
list of financial formulas
.

1 answer

Using the formula for continuous compounding, we have:

A = P*e^(rt)

where A is the amount owed, P is the principal loan amount, r is the interest rate (as a decimal), and t is the time period.

Plugging in the given values, we get:

A = 3700*e^(0.07*4)

A = 3700*e^0.28

A = 5320.23

Therefore, the amount owed after four years is $5320.23.