Question

Find the present value of $53,687 due in 4 years at an interest rate of 6%/y ear compounded continuously. (Round your answer to the nearest cent.)

Answer 1

The present value of $53,687 due in 4 years at a 6% continuous compound interest rate is found using the formula PV = FV * e^(-rt), and the calculations must be rounded to the nearest cent.

Step-by-step explanation:

To find the present value of $53,687 due in 4 years at a continuous compound interest rate of 6% per year, we use the formula for continuous compounding, which is PV = FV * e^(-rt), where PV is the present value, FV is the future value, r is the interest rate, and t is the time in years. We plug in the given values to get PV = $53,687 * e^(-0.06*4). After calculating the exponent and multiplying, we round the final answer to the nearest cent.

Here are the steps to perform this calculation:

1. Calculate the exponent value: -0.06*4 = -0.24.
2. Compute e to the power of the calculated exponent: e^(-0.24).
3. Multiply this result by the future value: $53,687 * e^(-0.24).
4. Round the result to the nearest cent to get the present value.