Question

A money market account offers 5% annual interest compounded continuously. To achieve a $50,000 balance in 12 years, what initial deposit is required? (Assume no future deposits or withdrawals.)
A. approximately $20,000
xxxxxB. approximately $27,440
C. approximately $27,840
D. approximately $30,330

its B

Answer 1

Answer:

b

Step-by-step explanation:

Answer 2

Given that a money market account offers 5% annual interest compounded continuously. To achieve a $50,000 balance in 12 years, $27,840 (approximately) initial deposit is required.

What is compound interest?

Compound interest is calculated by multiplying the initial loan amount, or principal, by the one plus the annual interest rate raised to the number of compound periods minus one.

$Amount = Principle (1 + \frac{rate}{100})^{time\ period}$

$50,000 = Principle(1 +\frac{5}{100})^{12}\\ \\50,000= Principle(1.05)^{12}\\\\50,000 = Principle*1.796\\\\Principle = 27841.87$

Learn more about compound interest here

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