In the formula A(t) = Pert for continuously compound interest, the letters P, r,

Question

In the formula A(t) = Pert for continuously compound interest, the letters P, r, and t stand for Correct: Your answer is correct. , Incorrect: Your answer is incorrect. , and Correct: Your answer is correct. , respectively, and A(t) stands for Incorrect: Your answer is incorrect. . So if $200 is invested at an interest rate of 5% compounded continuously, then the amount after 5 years is $ 225 Incorrect: Your answer is incorrect. . (Round your answer to the nearest cent.)

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Explanation / Answer

Given P = $ 200 r = 5 % and t = 5 years A(t) = $ 225

By using formula for continuously compound interest,

A(t) = Pert = 200 * (e0.05 * 5) = 200 * 1.284 = $ 256.8 or $ 257 (Answer)

r stands for incorrect. So answer is incorrect.

A(t) = Pert => 225 = 200 * (er*5) => e5r = 225/200 = 1.125 => 5r = ln (1.125) = 0.117

r = 0.117/5 = 0.02 = 2 % (Answer)

A(t) stands for incorrect. So, answer is incorrect.

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