How much money, invested at an interest rate of 10% per year compounded continuously, will amount to $98,000 after 16 years?
A)$19,785.86
B)$97,982.32
C)$39,571.72
D)$4,853.97
E)$108,306.75

Question

Quizplus · Accepted Answer

The formula for continuous compounding is $A = Pe^{rt}$, where $A$ is the amount, $P$ is the principal, $r$ is the rate, and $t$ is the time. Rearranging to solve for $P$, we get $P = \frac{A}{e^{rt}}$. Substituting $A = 98,000$, $r = 0.10$, and $t = 16$, we find $P = \frac{98,000}{e^{0.10 \times 16}} \approx \$19,785.86$.

How Much Money, Invested at an Interest Rate of 10