SOLUTION: How much should you invest in a continuously compounded account at an annually interest rate of 6% if you want exactly $8000 after four years?
Question 971373: How much should you invest in a continuously compounded account at an annually interest rate of 6% if you want exactly $8000 after four years? Found 2 solutions by lwsshak3, ikleyn:Answer by lwsshak3(11628) (Show Source):
You can put this solution on YOUR website! How much should you invest in a continuously compounded account at an annually interest rate of 6% if you want exactly $8000 after four years?
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Formula for a continuous compounding account: A=Pe^rt, P=initial investment, r=interest rate, t=years, A=amt after t-yrs
For given problem:
r=.06
t=4
A=8000
..
P=A/e^rt=8000/e^(.08*4)=8000/e^(.32)=5809.19
How much should you invest in the continuously compounded account? $5809
You can put this solution on YOUR website! .
How much should you invest in a continuously compounded account at an annually interest rate of 6%
if you want exactly $8000 after four years?
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Calculations in the post by @lwsshak3 are incorrect.
I came to provide an accurate solution.
Formula for a continuous compounding account: A=Pe^rt,
P = initial investment,
r = interest rate,
t=years,
A=amt after t-yrs
For given problem:
r = 0.06
t = 4
A = 8000
..
P = A/e^rt = 8000/e^(0.06*4) = 8000/e^(0.24)= 6293.02.
How much should you invest in the continuously compounded account? $6293.02.
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