Question

If $4,000,000 is invested at 5% interest compounded continuously, how much will the investment be worth in 25 years?

Answer 1

The answer is 8600000.

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Answer 2

The investment will worth $13,961,200 in 25 years when compounded continuously

The formula for compound interest compounded continuously is given;

A = P.
`e^(rt)`

Where A is the amount of money accumulated after 25 yrs = ?

Principal, P = $4,000,000

Rate, r = 5% = 0.05

Time, t = 25 years

A = $4,000,000 *
`e^(0.05*25)`

A = $4,000,000 *
`e^(1.25)`

A = $4,000,000 * 3.4903

A = $13,961,200

Therefore, the investment will worth $13,961,200 in 25 years