If you put $1,000 in a savings account that pays 5% interest compounded continuously, how much money will you have in your account in 10 years? Assume you make no additional deposits or withdrawals.
(Points : 2)
$1,628.89

$1,051.27

$1,648.72

$5,525.85

Question

If you put $1,000 in a savings account that pays 5% interest compounded continuously, how much money will you have in your account in 10 years? Assume you make no additional deposits or withdrawals.
(Points : 2)
       $1,628.89

       $1,051.27

       $1,648.72

       $5,525.85

wolf1728 · Answer

First calculate 5% compounded continuously:
annual rate = (e^r) -1
annual rate = (2.718281828^.05) -1
annual rate = 1.0512710964 -1
annual rate = .0512710964 or 5.12710964%

total = $1,000 * (1.0512710964)^n
total = $1,000 * 1.6487212706
total = 1,648.72
(which is the third choice down)