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If a nominal interest rate of 9% is compounded continuously, determine the unknown quantity in each of the following situations:

What uniform eoy amount for 9 years is equivalent to $8,000 at eoy 9?

User RATHI
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1 Answer

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Final answer:

To find the uniform end-of-year amount for 9 years that is equivalent to $8,000 at the end of year 9, we can use the formula for continuous compound interest. Plugging in the given values, the final amount is approximately $17,825.04.

Step-by-step explanation:

To find the uniform end-of-year amount for 9 years that is equivalent to $8,000 at the end of year 9, we need to use the formula for continuous compound interest. The formula is given by A = P * e^(rt), where A is the final amount, P is the initial principal, e is Euler's number approximately equal to 2.71828, r is the interest rate, and t is the time in years.

In this case, we have P = $8,000, r = 9% = 0.09, and t = 9 years. Plugging these values into the formula, we get:

A = $8,000 * e^(0.09*9)

Using a calculator or spreadsheet, we can find that e^(0.09*9) is approximately 2.71828^(0.81) = 2.22813. Multiplying this by $8,000 gives us the final answer:

A ≈ $8,000 * 2.22813 ≈ $17,825.04

User Cheikh
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