When the Interest on an Investment Is Compounded Continuously, the Investment

question 54

Multiple Choice

When the interest on an investment is compounded continuously, the investment grows at a rate that is proportional to the amount in the account. If $25,000 is invested (when ) and the amount in the account after 18 years is $46,940.26, find the interest rate on this investment? Round to one decimal place. ​

• A) 3.0%
• B) 3.5%
• C) 4.0%
• D) 4.5%
• E) 5.0%

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Definitions:

Par Value

The nominal or face value of a bond, stock, or coupon as stated in the financial instrument, which is a significant figure for calculating interest payments or dividends.

Par Value

The nominal or face value of a stock or bond as stated by the issuing company, often used in the context of bonds.

Preferred Stock

A class of ownership in a corporation with a specified dividend that must be paid before dividends to common stockholders.

Shares

Shares represent units of ownership interest in a corporation or financial asset, allowing shareholders to potentially participate in the profits and decision-making of the company.