When Interest Is Compounded Continuously, the Rate of Change of the Amount

question 49

Multiple Choice

When interest is compounded continuously, the rate of change of the amount x of the investment is proportional to the amount present. In this case, the proportionality constant is the annual interest rate r (as a decimal) ; that is, . If $2,500 is invested at 7%, compounded continuously, what will be the future value of this investment after 12 years? Round to the nearest cent. ​

• A)$4,600.00
• B)$5,776.80
• C)$5,630.48
• D)$5,708.32
• E)$5,790.92

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Definitions:

Wage Rate

The amount of compensation a worker receives per unit of time or output.

Labor Demand Curve

A graphical representation that shows the relationship between the quantity of labor demanded by firms and the wage rate.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and a homogeneous product.

Marginal Product

The extra output generated from adding a single unit of a specific input, with all other inputs remaining unchanged.