Compute the future value of $2,500 continuously compounded for 5 years at an APR

Question

Compute the future value of $2,500 continuously compounded for 5 years at an APR of 11 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Compute the future value of $2,500 continuously compounded for 4 years at an APR of 12 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Compute the future value of $2,500 continuously compounded for 11 years at an APR of 6 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Compute the future value of $2,500 continuously compounded for 10 years at an APR of 8 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Compute the future value of $2,500 continuously compounded for 5 years at an APR of 11 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Explanation / Answer

We can calculated future value if interest rate are continuously compounded

Amount = Pe^RT

Solution A

P = 2500

R = 11%

T= 5 years

Amount = 2500*e^11%*5 = 2500*1.733 = 4333.133

Solution B

P = 2500

R = 12%

T= 4 years

Amount = 2500*e^11%*5 = 2500*1.616 = 4040.186

Solution C

P = 2500

R = 6%

T= 11 years

Amount = 2500*e^11%*5 = 2500*1.934 = 4836.98

Solution D

P = 2500

R = 8%

T= 10 years

Amount = 2500*^e11%*5 = 2500*2.225 = 5563.852

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