Determine the value of $10,000 at the end of 3 years invested at 8 percent assuming continuous compounding.
A) $12,712
B) $12,400
C) $32,460
D) $12,600

Question

Quizplus · Accepted Answer

The formula for continuous compounding is: $A=P e^{rt}$ where A is the final amount, P is the principal, r is the annual interest rate as a decimal, and t is the time in years. Plugging in the given values, we get:

$A= 10,000 e^{0.08(3)}\approx 12,712$

Therefore, the answer is choice A, $12,712.

Determine the Value of $10,000 at the End of 3