How much interest can be accumulated during one year on a $1,000 deposit paying continuously compounded interest at an APR of 10 percent? A)$100.00 B)$105.17 C)$110.50 D)$115.70 Interest = $1,000 x e.¹ - $1,000 = $1,000 x 1.1052 - $1,000 = $1,105.17 - $1,000

Question

Quizplus · Accepted Answer

Using the formula for continuous compounding, we get: 
A = Pe^(rt) 
where P = $1,000, r = 0.10, and t = 1 year. 
Plugging in the values, we get: 
A = $1,000e^(0.10*1) 
A ≈ $1,105.17 
So the interest accumulated is: 
Interest = $1,105.17 - $1,000 
Interest ≈ $105.17 
Therefore, the best choice is B.

How Much Interest Can Be Accumulated During One Year on a $1,000