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How much money must be deposited today to become ​$1300 in 20 years at 7.5% compounded​ continuously?
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How much money must be deposited today to become ​$1300 in 20 years at 7.5% compounded​ continuously?

User Ccy
by
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1 Answer

1 vote
Use the formula for Amount for continuous compounding:

A = Pe^(rt)

Here A = $1300, r = 0.075 and t = 20 yrs. Thus,

1300 = P*e^(0.075*20), or 1300 = P (4.482).
$1300
Solving for P: P = ----------------- = $290.07 (answer)
4.482
User Terahertz
by
8.3k points
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