How much money, invested at an interest rate of 11% per year compounded continuously, will amount to $105,000 after 15 years?
A)$20,165.24
B)$117,209.20
C)$5,467.33
D)$40,330.48
E)$104,983.26

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 $P = \frac{A}{e^{rt}}$. Plugging in $A = 105,000$, $r = 0.11$, and $t = 15$, we find $P = \frac{105,000}{e^{0.11 \times 15}} \approx \$20,165.24$.

How Much Money, Invested at an Interest Rate of 11