You invest $2,500 today at 5.5 percent, compounded continuously. How much will this investment be worth 12 years from now?

Question

Quizplus · Accepted Answer

The correct answer is B.The formula for continuously compounded interest is:A = Pe^(rt)where:A is the future value of the investmentP is the principal investmente is the base of the natural logarithm (approximately 2.71828)r is the annual interest ratet is the number of yearsIn this case, we have:P = $2,500r = 5.5% = 0.055t = 12 yearsPlugging these values into the formula, we get:A = 2500e^(0.055*12)= 2500e^0.66= 2500 * 1.935= $4,837.50Therefore, the investment will be worth $4,837.50 12 years from now.

You Invest $2,500 Today at 5