What is the future value of $20,000 invested for 20 years at a nominal interest rate of 9 percent compounded continuously?
A) $112,088
B) $120,993
C) $108,894
D) $147,781

Question

Quizplus · Accepted Answer

Using the formula for continuous compounding: 
FV = Pe^(rt), where 
FV = future value 
P = principal (initial investment) = $20,000 
e = the mathematical constant e (approximately 2.71828) 
r = nominal interest rate = 9% (as a decimal, so r = 0.09) 
t = time period = 20 years

Plugging in the values: 
FV = $20,000 * e^(0.09*20) 
FV = $20,000 * e^(1.8) 
FV ≈ $120,993.06

Therefore, the answer is B, $120,993.

What Is the Future Value of $20,000 Invested for 20