Question

Nancy borrows $5000 at a rate of 16% interest per year. What is the amount due at the end of 5 years if the interest is compounded continuously?
$800
$11,127.70
$5,800
$11,000

Answer 1

Answer:

option 2

Step-by-step explanation:

Given that Nancy borrows 5000 dollars at the rate of 16% per year compounding continuously.

Principal =5000

Rate of interest =16%

Period = 5years

Interest is compounding continuously

AS per compounding interest formula we have

Final amount due = $Pe^{rt} \\=5000(2.718^{5(0.16)} \\=5000(2.7183)^{0.8} \\=\\11127.70$

Option 2 is right