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asambeis [7]
3 years ago
14

Find the principal needed now to get the given​ amount; that​ is, find the present value.To get $ 90 after 2 and three fourths y

ears at 6​% compounded continuouslyThe present value of $ 90 is $ nothing .​(Round to the nearest cent as​ needed.)
Business
1 answer:
Kisachek [45]3 years ago
6 0

Explanation:

For continuous compounding, we use the following formula

FV_{N} = PVe^{i  N}

<u>Scenario 1 : </u>

FV = $ 90

N = 2 years

I = 6%

PV= ?

FV_{N} = PVe^{i  N}

90 = PVe^{(0.06) (2)}

\frac{90}{e^{(0.06) (2)}}  = PV

PV = 79.8228

PV = $ 79.82

<u>Scenario 2:</u>

FV_{N} = PVe^{i  N}

90 = PVe^{(0.06) (3)}

PV = $ 75.17

<u>Scenario 3:</u>

FV_{N} = PVe^{i  N}

90 = PVe^{(0.06) (4)}

PV = $ 70.80

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