$1000 is invested at 6% interest compounded continuously. What is the value of the investment after 5 years?
A) $1349.86
B) $6691.13
C) $1338.23
D) $1822.12
E) none of these

Question

Quizplus · Accepted Answer

The formula for continuous compounding is given as A = Pe^(rt), where A is the ending amount, P is the principal amount, e is the mathematical constant (approx. 2.71828), r is the annual interest rate as a decimal, and t is the time in years. Plugging in the given values, we get:

A = 1000*e^(0.06*5)
A = $1349.86

Therefore, the value of the investment after 5 years is $1349.86, which corresponds to option A.

$1000 Is Invested at 6% Interest Compounded Continuously