a1.1.4 How much will an ihifialinvestment Of 5,000 be worth in 35 years if it earns interest compounded continuousiY at an annualrate Of 8.5%.? O

Algebra and Trigonometry (6th Edition)
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ISBN:9780134463216
Author:Robert F. Blitzer
Publisher:Robert F. Blitzer
ChapterP: Prerequisites: Fundamental Concepts Of Algebra
Section: Chapter Questions
Problem 1MCCP: In Exercises 1-25, simplify the given expression or perform the indicated operation (and simplify,...
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**Problem 21.1.4: Continuous Compounding Investment**

How much will an initial investment of $5,000 be worth in 35 years if it earns interest compounded continuously at an annual rate of 8.5%?

*Concept Explanation:*

In financial mathematics, continuous compounding uses the formula:

\[ A = Pe^{rt} \]

- \( A \) is the amount of money accumulated after n years, including interest.
- \( P \) is the principal amount (initial investment).
- \( r \) is the annual interest rate (decimal).
- \( t \) is the time the money is invested for (years).
- \( e \) is the base of the natural logarithm, approximately equal to 2.71828.
Transcribed Image Text:**Problem 21.1.4: Continuous Compounding Investment** How much will an initial investment of $5,000 be worth in 35 years if it earns interest compounded continuously at an annual rate of 8.5%? *Concept Explanation:* In financial mathematics, continuous compounding uses the formula: \[ A = Pe^{rt} \] - \( A \) is the amount of money accumulated after n years, including interest. - \( P \) is the principal amount (initial investment). - \( r \) is the annual interest rate (decimal). - \( t \) is the time the money is invested for (years). - \( e \) is the base of the natural logarithm, approximately equal to 2.71828.
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