Find the accumulated amount after 7 years on an investment of $2,000 earning an interest rate of 5% per year compounded continuously. Round to the nearest cent.
A) $2,814.20
B) $2,838.14
C) $14,700.00
D) $14,717.80

Question

Quizplus · Accepted Answer

The accumulated amount can be found using the formula:

A = Pe^(rt)

where A is the accumulated amount, P is the principal (initial investment), e is the base of the natural logarithm, r is the interest rate, and t is the time (in years).

In this case, P = $2,000, r = 0.05 (since the interest rate is given as a percentage, we need to divide by 100), and t = 7.

Plugging in these values, we get:

A = $2,000 e^(0.05*7)
A = $2,838.14 (rounded to the nearest cent)

Therefore, the best choice is B.

Find the Accumulated Amount After 7 Years on an Investment