Question

You have your heart set on buying a new car in 2 years. You invest $3,200 at 3.75% interest compounded continuously. How much money will have to use for your down payment on your new car

Answer 1

Answer:

The available amount for the down payment of car and invested $3,200 at 3.75% interest compounded continuously is 3449.23$

Explanation:

We know final amount is given by  

Where,

$A=P \times e^{r t}$

A   =   final amount

P   =  initial principal balance = $3200

r    =   interest rate = 3.74%

t    =  number of time periods elapsed = 2 years

Substituting the values in the formula

$r=\frac{3.75}{100}=0.0375$

A=$3200 \times e^{(0.0375 \times 2)}$

We know, e = 2.72

So we get A = 3449.23$ which is the available amount for the down payment of car .