Find the present value, using the present value formula and a calculator. (Round your answer to the nearest cent.)

Question

Achieve $225,500 at 8.25% compounded continuously for 8 years, 145 days.

Answer 1

Donna,

 

The present value formula is: PV= ∫R(t)e^-(rt)dt from 0 till the final time 

 

so in your case R(t)= $225500 r= 0.0825 and t= 8*(145/365) <- (a year and its fractional component)

 

substituting in out value we get  PV= ∫225500*e^-(0.0825t)dt

 

taking the integral we get [ 225500/-0.0825*e^(-0.825*8.4) ] -[ 225500/-0.0825*e^(-0.825*0)] and this is not in a from you can easily compute with any scientific calculator.

 

Note: 8.4 is just the time rounded, you should use something with more precision. 

 

Cheers!