Solve the Problem $\$ 22,000$ Is Invested in an Account Earning $4.5 \%$

question 54

Multiple Choice

Solve the problem.
-If $\$ 22,000$ is invested in an account earning $4.5 \%$ interest compounded continuously, determine how long it will take the money to quadruple. Round to the nearest year. Use the model $A = P e ^ { r t }$ where $A$ represents the future value of $P$ dollars invested at an interest rate $r$ compounded continuously for $t$ years.

• A) 3 years
• B) 308 years
• C) 31 years
• D) 36 years

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Definitions:

Estimated Useful Life

The expected period during which an asset is predicted to be usable for the purpose it was acquired.

Depreciation Expense

An accounting method to allocate the cost of a tangible asset over its useful life to represent wear and tear over time.

Straight-Line Method

A method of calculating depreciation that spreads the cost of an asset evenly over its useful life.

Gain or Loss

The financial result from selling assets or settling liabilities at amounts different from their carrying amount, showing either a profit (gain) or deficit (loss).