Eloise has deposited $2,000 in an investment account that pays 5% compounded continuously.How much will she have in her account in two years?
A)$2,205.00
B)$2,210.34
C)$2,105.54
D)$1,809.67

Question

Quizplus · Accepted Answer

We can use the formula for continuous compounding:

A = Pe^(rt)

where:
A = amount in account after time t
P = initial deposit
r = interest rate (as a decimal)
t = time in years

Plugging in the given values:

A = 2000*e^(0.05*2)
A = 2,210.34

Therefore, Eloise will have $2,210.34 in her account after two years. The answer is B.

Eloise Has Deposited $2,000 in an Investment Account That Pays