The compound amount when an investment is compounded continuously is A = Peni Where A = compound amount, P = original principal, n = # of years, and i = interest rate per year. Let P = 200, I = 0.06, and n = 4, then find A.
A)$254.42
B)$508.50
C)$2034.00
D)$1,017.00

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 in years. Substituting the given values, $P = 200$, $r = 0.06$, and $t = 4$, we get $A = 200e^{0.06 \times 4} = 200e^{0.24}$. Calculating this gives approximately $254.42.

The Compound Amount When an Investment Is Compounded Continuously Is