Problema Solution
A student wants to save $8000 for college in 5 years. How much should be put into an account that pays 5.2% annual interest compounded continually?
Answer provided by our tutors
t = 5 years
r = 0.052 or 5.3%
A = 8000 the future value
P = the principal
A = P*e^(rt)
P*e^(0.052*5)=8000
........
click here to see the equation solved for P
........
A = $6,168
The student should put $6,168 into the account.