Question

If $945 is invested at an interest rate of 4% per year and is compounded continuously, how much will the investment be worth in 10 years?
Use the continuous compound interest formula A = Pert.


A. $947

B. $984

C. $1,028

D. $1,410

Answer 1

Answer:

Option D $\ 1,410$  

Step-by-step explanation:

we know that

The formula to calculate continuously compounded interest is equal to

$A=P(e)^{rt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest in decimal  

t is Number of Time Periods  

e is the mathematical constant number

we have  

$t=10\ years\\ P=\ 945\\ r=0.04$  

substitute in the formula above  

$A=945(e)^{0.04*10}$  

$A=945(e)^{0.4}$  

$A=\ 1,410$