Engineering Board Exam Reviewer · Continuous Compounding · hard

Money flows continuously at a rate of P100,000 per year for 5 years. Find its present worth at 10% compounded continuously.

  1. P379,078.68
  2. P393,469.34
  3. P500,000
  4. P648,721.27

Answer

B. P393,469.34

Solution

PW= 05100,000e-0.10t,dt=100,000· 1-e-0.50.10=P393,469.34.

More Continuous Compounding questions

  1. Find the amount of P5,000 invested at 9% compounded continuously for 8 years.
  2. Find the compound amount of P10,000 invested at 6% compounded continuously for 5 years.
  3. Find the effective annual rate equivalent to a nominal rate of 8% compounded continuously.
  4. How long will it take money to double if invested at 7% compounded continuously?
  5. Find the present value needed to accumulate to P20,000 in 4 years at 5% compounded continuously.
  6. Find the nominal rate compounded continuously equivalent to an effective annual rate of 10.52%.
  7. For the same nominal rate and time period, which yields a higher compound amount: continuous compounding or annual compounding?

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