If $4,000,000 is invested at 5% interest compounded continuously, how much will the investment be worth in 25 years?

Question

asked Jan 12, 2020 149k views

2 Answers

Simon Perepelitsa · Answer 1 · 2020-01-17T19:00:20+0000

The investment will worth $13,961,200 in 25 years when compounded continuously

The formula for compound interest compounded continuously is given;

A = P.
e^(rt)

Where A is the amount of money accumulated after 25 yrs = ?

Principal, P = $4,000,000

Rate, r = 5% = 0.05

Time, t = 25 years

A = $4,000,000 *
e^(0.05*25)

A = $4,000,000 *
e^(1.25)

A = $4,000,000 * 3.4903

A = $13,961,200

Therefore, the investment will worth $13,961,200 in 25 years