hw 10 question 3

Question

At the time of the birth of a child, a parent wants to begin a college fund that will grow to $43000 by the child's 18^th birthday. Interest is compounded continuously at 7.5%. What should the initial investment (P₀) be?

Answer 1

P * e^(0.075*18)=43000

P * e(1.35)=43000

P =43000/e^(1.35)

=11,147.34