Question 1089077: Cindy will require $15,000 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 12% compounded continuously, she will have enough for school? (Round your answer to the nearest dollar.)
Answer by mathmate(429)   (Show Source):
You can put this solution on YOUR website! Question:
Cindy will require $15,000 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 12% compounded continuously, she will have enough for school? (Round your answer to the nearest dollar.)
Solution:
F = 15000 (Future value)
t = 2 (Time in years)
r = 0.12 (annual interest Rate)
P = Principal
We have,
F=Pe^(rt) =>
P=F/e^(rt)
=15000/e^(0.12*2)
=15000/e^(0.24)
=11799.42
Cindy will have to have 11799.42 (or more) to achieve her goal of accumulating $15000 in two years at 12% continuous interest.
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