Suppose an investment earns 3.5% interest compounded continuously. You were asked to find the future value of a $4900 investment after 11 years.

Answer 1

The formula for calculating the future value of an investment with continuous compounding is:

FV = P * e^(rt)

where:
FV = future value
P = principal amount (initial investment)
e = Euler's number (approximately equal to 2.71828)
r = annual interest rate (in decimal form)
t = time in years

In this case, the principal amount (P) is $4900, the annual interest rate (r) is 3.5% or 0.035, and the time (t) is 11 years.

Plugging in these values into the formula, we get:

FV = $4900 * e^(0.035*11)
FV = $4900 * e^(0.385)
FV ≈ $4900 * 1.46908
FV ≈ $7191.86

Therefore, the future value of a $4900 investment after 11 years with a 3.5% interest rate compounded continuously is approximately $7191.86.