Question

An account with an initial deposit of $1200 earns 3.75% interest, compounded continuously. How much will the account be worth after 25 years? $ 2978.94 $ 3124.71 $ 3021.56 $ 3064.31

Answer 1

$3,064.31

Explanation:

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

Where,

P=principal=$1200

r=interest rate=3.75%=0.0375

n=number of periods=12 months per year

t=time=25 years

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

=1200(1+0.0375/12)^12*25

=1200(1+0.00313)^300

=1200(1.00313)^300

=1200(2.5537)

=3064.4

A=$3,064.4

The closest approximation to the answer is $3,064.31