PRC-2 · Chapter 5 · Question 19 of 50
Danish deposits Rs. 50,000 into a high-yield fund that calculates interest using continuous compounding at an annual rate of 8%. What is the approximate balance after 5 years?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 74,591
Explanation
Continuous compounding uses the formula S = P * e^(rt). Here, S = 50,000 * e^(0.08 * 5) = 50,000 * e^(0.40). Using the value of e^0.40 (≈ 1.49182), the balance is roughly 74,591.
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