Question

Suppose your great-great grandfather invested $900 earning 4.5% interest compounded continuously 100 years ago. Howwould his investment be worth today?

Answer 1

Answer;

$73,429.67

Explanations:

The formula for calculating compound amount is expressed according to the formula;

`A=P(1+(r)/(n))^(nt)`

P is the principal (money invested) = $900

r is the rate (in decimal) = 4.5% = 0.045

t is the time (in years) = 100 years

n is the compounding time = 1

Substituting the given parameters into the formula;

`\begin{gathered} A=900(1+(0.045)/(1))^{100(1)^{}} \\ A=900(1+0.045)^{100_{}} \\ A=900(1.045)^(100) \\ A=900(81.5885) \\ A=\$73,429.67 \end{gathered}`

Hence the investment will be worth $73,429.67 today if compounded continuously