Solve the problem.
-What will the value of an account (to the nearest cent) be after 8 years if $100 is invested at 6.0% interest compounded continuously?
A) $159.38
B) $175.32
C) $161.61
D) $849.47

Question

Quizplus · Accepted Answer

The formula for continuous compounding is: A = Pe^rt, where A is the ending amount, P is the principal (initial amount), e is Euler's number (approximately 2.71828), r is the annual interest rate, and t is the time in years.

Plugging in the given values, we get: 
A = 100*e^(0.06*8) 
A = 100*e^0.48 
A = $161.61 (rounded to the nearest cent)

Therefore, the best choice is C. The formula for continuous compounding is A = Pe^(rt), where A is the ending amount, P is the principal, e is the constant 2.71828, r is the annual interest rate (as a decimal), and t is the time in years. Plugging in the given values, we get A = 100*e^(0.06*8) = $161.61 to the nearest cent. Therefore, the best choice is C.

Solve the Problem. -What Will the Value of an Account (To the Nearest