Final answer:
To find the present value of $20000 due 16 years later at 7.2% interest compounded continuously, you can use the formula: PV = FV / e^(rt).
Step-by-step explanation:
To find the present value of $20000 due 16 years later at 7.2% interest compounded continuously, you can use the formula:
PV = FV / e^(rt)
Where PV is the present value, FV is the future value, e is the base of natural logarithms, r is the interest rate, and t is the number of years.
Substituting the given values:
PV = 20000 / e^(0.072 * 16)
Using a calculator, the present value is approximately $7154.60.