an investment is expected to pay 5 per year compounded continuously. If you want the value of the investment to be $700,000 afte

Question

dolphi86 [110]

4 years ago

8

an investment is expected to pay 5 per year compounded continuously. If you want the value of the investment to be $700,000 afte

r 25 years, how much should you invest initially? Round to the nearest dollar

Mathematics

1 answer:

andre [41] · Answer 1 · 2022-01-05T14:53:04+03:00

andre [41]4 years ago

8 0

The multiplier for continuous compounding is e^(rt). You want
700,000 = P·e^(0.05·25) ≈ 3.490343P
Then
700,000/3.490343 = P

You should invest $200,553 initially.