Question

How much would $700 be worth after 8 years, if it were invested at 5%interest compounded continuously? (Use the formula below and round youranswer to the nearest cent.)A(t) = PoetOA. $5887.12OOB. $1044.28c. $38,218.71OD. $6432.11

Answer 1

1) Since this investment will be done at a 5% interest rate compounded continuously, we can write the following:

`\begin{gathered} A(t)=P_0e^(rt) \\ \\ A(8)=700e^(0.05*8) \\ \\ A(8)=700e^(0.4) \\ \\ A(8)\approx1044.28 \end{gathered}`

2) So, we can tell that given there will not be withdrawals or another investment in this account, after 8 years the future value is:

`\$1044.28`

Thus, the answer is B.