Question

Hint: See 2-6

You deposit $1,000 at 2.3% interest, compounded continuously. What will your
ending balance be after 5 years?
O $1,000.23
O $1,115
O $11,500
O $1,120.41
O $1,121.87

Answer 1

The ending balance after 5 years with continuously compounded interest will be $1,121.87. Therefore correct option is D

Step-by-step explanation:

To find the ending balance after 5 years with continuously compounded interest, we can use the formula:

A = P * e^(rt),

where A is the ending balance, P is the principal amount, r is the interest rate, t is the time in years, and e is a mathematical constant approximately equal to 2.71828.

Plugging in the given values:

1. P = $1,000
2. r = 0.023
3. t = 5 years

We get:

A = $1,000 * e^(0.023 * 5)

= $1,121.87.

Therefore, the ending balance after 5 years will be $1,121.87.