How much would Sophie have in her account at the end of 10 years if she deposit $2,000 into the account today if she earned 8 percent interest and interest is compounded continuously?
A) $4,317
B) $4,444
C) $4,451
D) $4,521

Question

Quizplus · Accepted Answer

The formula for continuous compounding is:
A = Pe^(rt)
where:
A = amount after time t
P = principal (initial amount)
e = Euler's number (approximately 2.718)
r = annual interest rate (as a decimal)
t = time in years

Plugging in the given values:
P = $2,000
r = 0.08
t = 10

A = 2000*e^(0.08*10)
A = $4,450.58

Round up to the nearest cent, the answer is $4,451. Therefore, the best choice is C.

How Much Would Sophie Have in Her Account at the End