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$4,200 is invested with a 5.1% annual percentage rate (APR) compounded continuously. What is the value of the investment after 14 years?

A. $6,892.64
B. $5,398.73
C. $9,140.29
D. $3,780.92

1 Answer

3 votes

Final answer:

The value of the investment after 14 years is approximately $6,892.64.

Step-by-step explanation:

To calculate the value of an investment compounded continuously, we use the formula: A = P * e^(rt), where A is the final amount, P is the principal (initial investment), e is Euler's number (approximately 2.71828), r is the interest rate, and t is the time in years.

In this case, the principal (P) is $4,200, the interest rate (r) is 5.1% (or 0.051 as a decimal), and the time (t) is 14 years. Plugging these values into the formula, we get: A = 4200 * e^(0.051 * 14).

Calculating this expression, we find that the value of the investment after 14 years is approximately $6,892.64.

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