Question

You want to have $200,000 when you retire in 25 years. If you can earn 3% interest rate compounded continuously, how much would you need to deposit now into the account to reach your retirement goal?

Answer 1

9514 1404 393

Answer:

  $94,473.31

Step-by-step explanation:

The multiplier in 25 years is ...

  e^(rt) = e^(0.03·25) = e^0.75 ≈ 2.117

To have an account value of $200,000 in 25 years, you need to deposit now ...

  $200,000/2.117 = $94,473.31

_____

When this amount is multiplied by 2.117, the result is 200,000.