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?

Question

asked Mar 2, 2020 105k views

1 Answer

Admoghal · Answer 1 · 2020-03-08T23:18:00+0000

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.