Solve the problem.
-An original investment of $7000 earns 7% interest compounded continuously. What will the investment be worth in 3 years? Round to the nearest cent.
A)$8470.00
B)$8635.75
C)$8735.75
D)$8575.30

Question

Quizplus · Accepted Answer

The formula for continuous compounding is $A = Pe^{rt}$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount (the initial amount of money), $r$ is the annual interest rate (decimal), and $t$ is the time the money is invested for in years. Plugging in the given values: $A = 7000e^{0.07*3}$, we find $A ≈ 8635.75$.

Solve the Problem. -An Original Investment of $7000 Earns 7% Interest Compounded Continuously