Question

Find the amount of money (Future Value) in an account where $5,100 is deposited (Present Value) at an interest rate of 8% per year compounded continuously and the money is left in the account for 13 years.

round to 2 decimal places.

Answer 1

Explanation:

The formula for calculating the future value of a continuously compounded investment is:

FV = PV * e^(rt)

where PV is the present value, r is the annual interest rate as a decimal, t is the time in years, and e is the mathematical constant approximately equal to 2.718.

Plugging in the given values, we get:

FV = 5100 * e^(0.08 * 13) = 5100 * e^1.04 = 5100 * 2.856116786 = 14536.86

So, the future value of the investment after 13 years at an 8% interest rate compounded continuously would be approximately $14,536.86. Rounded to 2 decimal places, this is $14,536.86.