Question

if 4000000 is invested at 5% interest compounded continuously, how much will the investment be worth in 25 years??

Answer 1

FV = $13,961,371.83 The phrase "compounded continuously" has nothing to do with when the interest was compounded but refers to how the annual rate was miscalculated by multiplying an interval rate by the number of intervals in a year. Such rates are called "nominal" rates as they are known to be incorrect but close. A compounded continuosly rate is the worse that such a rate could be from the true rate and is when the number of intervals is infinite. Basically 5% per annum compounded continuously is really more like 5.1271% per annum.