Question

Jake's parents want $100,000 at the end of 40 years. They put their money in an account that yields 4% per year compounded continuously. How much money should jakes parents deposit?

Answer 1

Answer:

$ 20,189.65

Step-by-step explanation:

Jake's parents want $100,000 at the end of 40 years. They put their money in an account that yields 4% per year compounded continuously. How much money should jakes parents deposit?

From the above question, we are to find the Principal. The formula for Principal compounded continuously =

P = A / e^rt

Where:

A = Amount after time t = $100,000

r = Interest rate = 4%

t = Time in years = 40 years

First, convert R percent to r a decimal

r = R/100

r = 4%/100

r = 0.04 per year,

Then, solve our equation for P

P = A / e^rt

P = 100,000.00 / e ^(0.04×40)

P = $ 20,189.65

Therefore, the amount Jake's parents should invest = $ 20,189.65