The compound amount when an investment is compounded continuously is A = Peni Where A = compound amount, P = original principal, n = # of years, and i = interest rate per year. Find the compound amount of an investment of $2,500 at an interest rate of 10% for 2 years if it is compounded continuously.
A)$3,000.00
B)$3,053.51
C)$4,023.59
D)$3,025.00

Question

Quizplus · Accepted Answer

Using the formula A = Pe^(ni), we have:

A = 2500*e^(0.10*2)
A = 2500*e^(0.20)
A = 2500*1.221403...
A = 3053.51 (rounded to the nearest cent)

Therefore, the compound amount of the investment is $3,053.51.

The Compound Amount When an Investment Is Compounded Continuously Is