Brian wants to buy a bond that will mature to $5500 in 7 year. How much should he pay for the bond now if it earns interest at a rate of 4% per year, compounded continuously?

Question

Do not round any intermediate computations, and round to the nearest cent.

Answer 1

A = Pe^rt

A =5500, r = .04, t = 7

5500 = Pe^rt = Pe^.04(7)

5500 = Pe^.28

P = 5500/e^.28

P = about $4,156.81