SOLUTION: Word problems is something I have never been good at. This is one of those. Will I convert the 9% to decimal? Then, where do I go from there to solve this? Solve the problem

Question 85551This question is from textbook
: Word problems is something I have never been good at. This is one of those.
Will I convert the 9% to decimal? Then, where do I go from there to solve this?
Solve the problem (not in Text). Cindy will require $11,000 in 2 years to return to college to get an MBA degree. How much money should she ask her parents for now so that, if she invests it at 9% compounded continuously, she will have enough for school? (Round your answer to the nearest dollar.)
This question is from textbook

Answer by ankor@dixie-net.com(22740) (Show Source): You can put this solution on YOUR website!
Cindy will require $11,000 in 2 years to return to college to get an MBA degree. How much money should she ask her parents for now so that, if she invests it at 9% compounded continuously, she will have enough for school? (Round your answer to the nearest dollar.)
:
Yes, convert 9% to .09
:
The continuous interest equation: P * e^(r*t) = A
Where A is the resulting amt; P = principal; r = interest rate; t = time in yrs
:
In this problem we need to find the principal (P), A=11000, r=.09, t=2
:
P * e^(.09*2) = 11000
P * e^.18 = 11000
P =
on a good calc enter:
11000/(e^.18) = 9187.97 ~ $9188 required
:
Check solution on a calc: enter 9188 * e^.18 = 11000.03
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