Question

Jerome will be buying a used car for $11,000 in 4 years. How much money should he ask his parents for now so that, if he invests it at 8% compounded continuously, he will have enough to buy the car?

Answer 1

Answer:

$7,987.64

Step-by-step explanation:

We know,

A = Pe^(rt)

Here,

A = 11000  

interest r = .08

Time t = 4

Now,

11000 = Pe^(.08 * 4)

Or, 11000 = Pe^.32  

Or, 11000 / e^.32 = P

Or, 7987.6394 = P

Or, P= 7,987.64

Jerome will have to ask for $7,987.64 to his parents.