Please show step by step and say whats happening so I can study. I\'m having a h
ID: 3016290 • Letter: P
Question
Please show step by step and say whats happening so I can study. I'm having a hard time in this course.
Complete the table for an investment if interest is compounded continuously. Deposi Annual Rate Doubling Time Amount in 30 yr 1500 9.3 al Deposi Annual Rate Doubling Time (y Amount n 30 yr 1500 9.3 How much money must you invest now at 4.5% interest compounded continuously in order to have $10.000 at the end of 4 years? You must inves s 5 yr om now. Assuming that money can be invested at 6.2% with interest compounded continuously, what is the present value of that years salary? An athlete signs a contract that guarantees a $14-million salaryExplanation / Answer
applying continuous compounding formula
A = P e^rt
initial deposit = 1500
rate = 9.3%
doubling amount = 2* 1500
2* 1500 = 1500 e^ (.093)t
2 = e^ (.093)t
ln 2 = .093t
t = 7.45 years ( doubling time )
amount in 30 year
A = 1500 e^ (.093* 30 )
A = $ 24421.53
2) A = 10,000
rate = 4.5%
time = 4 years
10,000 = P e^(.045*4 )
P = 10,000 / e^(.045*4)
P = 8354.22
therefore, $ 8354.22 must be invested to have $ 10,000 at the end of 4 years