Answered: If you invest $20,000 at an annual rate…

If you invest $20,000 at an annual rate of 1% compounded continuously, calculate the final amount you will have in the account after 20 years. A) $16,374.62 B) $24,428.05 C) $97,033.04 D) $147,781.12

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 9PROB

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

If you invest $20,000 at an annual rate of 1% compounded
continuously, calculate the final amount you will have in the
account after 20 years.
A) S16,374.62 B) $24,428.05 C) $97,033.04 D) S147,781.12

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