Continuously Compounded Interest Quick Check

Question

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Question
The function A=P(1+rn)nt
, where A is the amount of money in the account after compounding, P is the principal, r is the interest rate expressed as a decimal, n is the number of compounding periods, and t is time in years used to calculate the balance in an account with compound interest.

Select the correct answer from the list.

(1 point)
The function is a
function.

Answer 1

The function described is a compound interest function. However, note that the specific formula provided seems to mix notations for different types of compounding. For continuously compounded interest, the formula is generally expressed as:

\[ A = Pe^{rt} \]

where \( e \) is the base of the natural logarithm. Your formula seems to imply periodic compounding instead.

If your question is asking for what type of function it represents, it is a mathematical function used to calculate compound interest. If you are looking for more specifics, the correct terminology would be exponential function when describing the nature of the growth exhibited by this formula.