Question

What would the value of an asset have to be now in order that it will grow to a value of $50,000 in 10 years if the value of the asset grows at 8% compounded continuously?

Answer 1

Answer: $ 22,466.45

Explanation:

Given : Future value :
`FV= \$50,000`

The number of time period :
`t=10\text{ years}`

The rate of interest :
`r=8\ %=0.08`

Let P be the present value.

The formula to calculate the future value is given by :-

`FV=Pe^(rt)`

`50000=Pe^(0.08*10)\\\\\Rightarrow\ 50000=P*2.22554092849\\\\\Rightarrow\ P=(50000)/(2.22554092849)\\\\\Rightarrow\ P=22466.4482059\approx22,466.45`

Hence, the present value of asset would be $ 22,466.45.