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31 July, 05:45

Cindy will require $11,000 in 4 years to return to college to get an mba degree. how much money should she ask her parents for now so that, if she invests it at 10% compounded continuously, she will have enough for school

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  1. 31 July, 06:07
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    In this problem we need to find the principal (P), A=11000, r=.09, t=2

    :

    P * e^ (.09*2) = 11000

    P * e^.18 = 11000

    P =

    on a good calc enter:

    11000 / (e^.18) = 9187.97 ~ $9188 required

    :

    Check solution on a calc: enter 9188 * e^.18 = 11000.03 Yes, convert 9% to. 09

    :

    The continuous interest equation: P * e^ (r*t) = A

    Where A is the resulting amt; P = principal; r = interest rate; t = time in yrs
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