Continuous Compounding and the Number e

What is the approximate value of the number e?

• 3.14

• 1.414

• 2.718

• 1.618

In the formula A = P * e^(RT), what does the variable P represent?

• The initial deposit

• The accumulated amount

• The time period

• The interest rate

What does the variable R represent in the continuous compounding formula?

• The accumulated amount

• The initial deposit

• The interest rate

• The time period

In the context of continuous compounding, what does the expression e^(RT) represent?

• The time period

• The interest rate

• The growth factor

• The initial deposit

What is the formula used for continuous compounding?

• A = P * (1 + R)^T

• A = P * e^(RT)

• A = P * (1 + RT)

• A = P * e^(R/T)

If a $7,400 deposit is compounded continuously at 5% for 6 years, what is the ending balance?

• $10,000.00

• $8,500.00

• $9,000.00

• $9,988.96

How should 30 months be converted into years for the continuous compounding formula?

• 2 years

• 3 years

• 2.5 years

• 1.5 years

What is the ending balance for a $10,000 deposit compounded continuously at 3.1% for 30 months?

• $10,805.82

• $11,000.00

• $10,500.00

• $10,300.00

To find the initial deposit needed to reach a certain accumulated value, which variable are we solving for in the formula A = P * e^(RT)?

• R

• P

• T

• A

If the accumulated value is $20,000, the rate is 6%, and the time is 7 years, what is the initial deposit?

• $14,000.00

• $12,000.00

• $15,000.00

• $13,140.94