Lucky Jack wins the lottery! He deposits $100,000 in an account that earns 4% interest compounded continuously. How much money is in the account at the end of 5 years?A) $120,357 B) $122,140 C) $125,620 D) $225,820

Accepted Solution

Answer:Option B) $122,140 Step-by-step explanation:we know that The formula to calculate continuously compounded interest is equal to [tex]A=P(e)^{rt}[/tex]  where  A is the Final Investment Value  P is the Principal amount of money to be invested  r is the rate of interest in decimal  t is Number of Time Periods  e is the mathematical constant number we have  [tex]t=5\ years\\ P=\$100,000\\ r=0.04[/tex]  substitute in the formula above  [tex]A=\$100,000(e)^{0.04*5}=\$122,140.28[/tex]  Round to the nearest dollar[tex]\$122,140.28=\$122,140[/tex]