Find how much money needs to be deposited now into an account to obtain $6,200 (Future Value) in 15 years if the interest rate is 5% per year compounded continuously.

Question

Find how much money needs to be deposited now into an account to obtain $6,200 (Future Value) in 15 years if the interest rate is 5% per year compounded continuously.

Round your answer to 2 decimal places

Answer 1

The formula for compounded continuously is:

F = P• e^(rt)

where:

F = the future amount=6200

P = principal (needs to be deposited)

r = rate=.05

t = time in years = 15

6,200 = P•e^(.05•15)

6,200 = P•e^(.75)

P = 6,200/e^(.75)

P = $2,928.67