5A-1

FV CONTINUOUS COMPOUNDING If you receive $15,000 today and can invest it at a 6% annual rate compounded continuously, what will be your ending value after 15 years?

5A-2

PV CONTINUOUS COMPOUNDING In 7 years, you are scheduled to receive money from a trust established for you by your grandparents. When the trust matures there will be $200,000 in the account. If the account earns 9% compounded continuously, how much is in the account today?

5A-3

FV CONTINUOUS COMPOUNDING Bank A offers a nominal annual interest rate of 7% compounded daily while Bank B offers continuous compounding at a 6.9% nominal annual rate. If you deposit $1,000 with each bank, what will be the difference in the two bank account balances after two years?

5A-4

CONTINUOUS COMPOUNDED INTEREST RATE In order to purchase your first home 6 years from today, you need a down payment of $40,000. You currently have $20,000 to invest. To achieve your goal, what nominal interest rate, compounded continuously, must you earn on this investment?

5A-5

CONTINUOUS COMPOUNDING You have the choice of placing your savings in an account paying 10.25% compounded annually, an account paying 10.1% compounded semiannually, or an account paying 9.5% compounded continuously. To maximize your return, which would you choose?

5A-6

CONTINUOUS COMPOUNDING You have $11,572.28 in an account that has been paying an annual rate of 9%, compounded continuously. If you deposited some funds 15 years ago, how much was your original deposit?

5A-7

CONTINUOUS COMPOUNDING For a 10-year deposit, what annual rate payable semiannually will produce the same effective rate as 3% compounded continuously?

5A-8

PAYMENT AND CONTINUOUS COMPOUNDING You place $2,000 in an account that pays 8% interest compounded continuously. You plan to hold the account exactly 3 years. At the same time, in another account you deposit money that earns 9% compounded semiannually. If the accounts are to have the same amount at the end of the 3 years, how much of an initial deposit do you need to make now in the account that pays 9% interest compounded semiannually?