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?