Question

Given the formula:

A = Pe^r.t
Using your scientific calculator, find the money accumulated if you invested $65,000 at 7.3% interest for 10 years compounded continuously.
a. $134,880.24.
b. $96,219,495.29.
c. $69,922.48.
d. None of the above.

Answer 1

9514 1404 393

Answer:

a. $134,880.24

Explanation:

Put the numbers into the formula and do the arithmetic.

A = $65,000×e^(0.073×10) ≈ $134,880.24

_____

Additional comment

The doubling time for continuously compounded interest is 69.3 years divided by the interest rate in %. Here, that is 69.3/7.3 = 9.49 years. That means an investment of 10 years will be slightly more than double the original amount. 2×65,000 = 130,000, so choice A is in the right ballpark. The other numerical choices are not.