Question

If $360 is invested at an interest rate of 13% per year and is compounded continuously, how much will the investment be worth in 3 years? Use the continuous compound interest formula: A= Pe^rt

a) $584.88
b) $583.66
c) $581.27
d) $268.11

Answer 1

none of the above; $531.71

Explanation:

Fill in the given numbers and do the arithmetic.

A = $360·e^(0.13·3) = $360·e^0.39 ≈ $360·1.1.47698

A ≈ $531.71

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None of the offered choices is correct. Have your teacher show you how this problem is worked.

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Answer choice c) is approximately correct for an interest rate of 16%. The correct value would be $581.79.