Investment Formulas Quiz

You invest $10,000 today into a fund with 6% interest compounded continuously for 8 years. Which formula should you use?

• FV = ∫₀ᵀ R(t)e^{k(T - t)}dt

• A = P(1 + r)^t

• A = Pe^{kt}

• None – discrete compounding

Answer explanation

You want $500,000 in 10 years. Interest is 5% continuously. You will invest continuously at a fixed rate. Which formula should you use?

• A = Pe^{kt}

• Use compound interest with monthly deposits

• This case doesn’t use exponential growth

• FV = ∫₀ᵀ R(t)e^{k(T - t)}dt

Answer explanation

Your company will receive $80,000 per year continuously for 15 years, at 6% interest compounded continuously. Which formula gives the total value at the end?

• A = Pe^{kt}

• FV = ∫₀ᵀ R(t)e^{k(T - t)}dt

• Not enough information

• Use simple interest

Answer explanation

You deposit $1,000 every month into a fund earning 4% interest compounded quarterly. Which formula fits this situation?

• A = Pe^{kt}

• FV = ∫₀ᵀ R(t)e^{k(T - t)}dt

• Use logarithmic growth

• ❌ Neither – this is discrete compounding

Answer explanation

You already have $50,000. You want to know how much it grows in 20 years at 7% continuous compounding. Which formula should you use?

• A = Pe^{kt}

• Use present value formula

• Use annuity due formula

• FV = ∫₀ᵀ R(t)e^{k(T - t)}dt

Answer explanation