Question

1.5 Q10.) Find the value of an investment compounded continuously.

Answer 1

The formula for continuously compounded investments is expressed as follows:


`A = Pe^(rt)`

P is the initial amount invested, r is the rate, and t is the amount of years the investment is compounded.

Convert the percentage into a decimal by dividing by 100:


`4.55 / 100 = 0.0455`

We now have all of our values, so plug them into the equation:


`P = 15,000, r = 0.0455, t = 14`


`15,000e^((0.0455)(14)) = 15,000e^(0.637) = 28,361.999`

To round to the nearest cent, look at the thousandths value:

28,361.999
9 > 5
28,361.999 ≈ 28,362

The value of this investment will be $28,362.