If you receive $15,000 today and can invest it at a 4.25% annual rate compounded continuously,...

Question

Question

If you receive $15,000 today and can invest it at a 4.25% annual rate compounded continuously, what will be your ending value after 20 years?

a. $41,060.80

b. $43,517.43

c. $35,094.70

d. $28,426.71

Answer 1

Answer #1

In case of Continuous Compounding,

Ending Value = Principal * e^rt

r = rate of return

t = time period

Here,

Ending Value = 15000 * e^{0.0425 * 20}

Ending Value = $35,094.70

Option C is correct.

Answer 2

Similar Homework Help Questions

(a) Suppose that you can invest with a continuously compounded rate of 5.25% per annum. (i)...

(a) Suppose that you can invest with a continuously compounded rate of 5.25% per annum. (i) If you invest $50,000 today, how many years will it take for your investment to be worth $1 million? (ii) If you want your investment to grow to be $1 million in 10 years, how much do you need to invest today? (iii) Compute the equivalent effective 1-year rate
If you invest $6,000 today in an account at an annual interest rate of 7% compounded...

If you invest $6,000 today in an account at an annual interest rate of 7% compounded continuously, what would you have in the account at the end of 6 years? DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ROUND ANSWER TO THE NEAREST CENT (2 Decimals). LIST THE NUMBER AS A POSITIVE NUMBER.
if you were to receive $10,000 today to invest at 6% interest and for 5 years....

if you were to receive $10,000 today to invest at 6% interest and for 5 years. but if you receive a $1000 extra at year 1, what would this total be equivalent be in 5 years? (fv) if interest rate is 6% compounded continuously what would this investment be equivalent in 5 years?

If you invest $10,000 today and earn a 20% annual internal rate of return (IRR) over...

If you invest $10,000 today and earn a 20% annual internal rate of return (IRR) over five years (with all of the proceeds received at the end of the fifth year), then the amount you will receive at the end of the fifth year is: How much would you pay today for an investment offering a lump sum of $100,000 in five years if you hoped to earn an annual rate of return of 25%? You invest $300,000 today and...
You can invest £3,000 today and will receive £9,000 in ten years. You would be earning...

You can invest £3,000 today and will receive £9,000 in ten years. You would be earning what annual rate of interest if compound interest is paid yearly?
You have the opportunity to invest $5,000 today and receive risk free payments of $4,000 at...

You have the opportunity to invest $5,000 today and receive risk free payments of $4,000 at the end of each of the next three years. Assume that you can borrow and lend at a risk free rate of 12% per year, compounded annually. The internal rate of return on this investment opportunity is 60.74%. True or False (Circle one). If you take this project, after you receive the final payment of $4,000 at time t=3 you will have earned an...

If you invest $1,200 each year for the next 12 years at a rate of 4.25%,...

If you invest $1,200 each year for the next 12 years at a rate of 4.25%, compounded monthly, what will be the future value of this investment?
You will receive a $90,000 inheritance in 55 years. You could invest that money today at...

You will receive a $90,000 inheritance in 55 years. You could invest that money today at 88% compounded semi dash annually semi-annually. What is the present value of your inheritance?
Problem 5 Intro The continuously compounded annual rate is 13%. Part 1 Attempt What is the...

Problem 5 Intro The continuously compounded annual rate is 13%. Part 1 Attempt What is the present value of $10,000 that you'll receive in 5 years? No decimals Submit

1. Suppose you have A, dollars to invest in a savings account eaming an annual interest...

1. Suppose you have A, dollars to invest in a savings account eaming an annual interest rate of r percent compounded continuously. Furthermore, suppose that you make annual deposits of d dollars to the account. The differential equation governing this situation is dA =rA+d, AO) = Ao (a) Find an equation for the future value Ac) of the account by solving the aforementioned initial value problem. Be sure your solution is correct as this will be used for the remaining...