Question

Suppose an investment of $20,000 is invested at an annual rate of 4.5%, compounded continuously. What is the value of the account after 5 years? Round your answer to the nearest cent/penny.

Answer =
dollars. (Round to two decimal places)

Answer 1

The formula for calculating the value of an investment with continuous compounding is:

A = Pe^(rt)

where A is the resulting amount, P is the principal amount, e is the mathematical constant e (approximately equal to 2.71828), r is the annual interest rate, and t is the time in years.

Substituting the given values, we get:

A = 20000 * e^(0.045 * 5)

≈ 26,088.19

Therefore, the value of the account after 5 years is approximately $26,088.19. Rounded to the nearest cent/penny, the answer is $26,088.19.