
1
advanced-mathAn investment of $8,000 earns continuous compound interest at 5% annual rate. What is the value after 10 years?
Use: where
A
$13,181.23
B
$12,000.00
C
$14,000.00
D
$13,030.16
Correct Answer: A
Choice A is the correct answer. Apply the continuous compound interest formula.
- Formula: where , , .
- Calculate exponent: .
- Compute: .
- Result: After 10 years, the investment is worth $13,181.23.
💡 Strategic Tip: Continuous compounding uses base , which grows faster than annual compounding.
Choice B is incorrect because this assumes simple interest (8000 + 4000). Choice C is incorrect because this calculation is wrong. Choice D is incorrect because this uses annual compounding, not continuous.