Question

Jerome will be buying a used car for ​$12,000 in 2 years. how much money should he ask his parents for now so​ that, if he invests it at ​3% compounded continuously ​, he will have enough to buy the​ car?

Answer 1

Jerome should ask his parents for the amount calculated through the formula for compound interest.

Step-by-step explanation:

To find out how much money Jerome should ask his parents for now, we need to use the formula for compound interest. The formula for compound interest is given as:

A = P imes e^(r imes t)

Where:

A is the amount of money after t years

P is the initial investment

r is the interest rate

t is the number of years

In this case, Jerome wants to have $12,000 in 2 years, so t = 2. The interest rate is given as 3%, which can be expressed as 0.03. We can rearrange the formula to solve for P:

P = A / (e ^(r imes t))

Substituting the given values, we have:

P = 12000 / (e^(0.03 imes 2))

Calculating this expression will give us the amount of money that Jerome needs to ask his parents for now.