Question

WILL GIVE BRAINLIEST Mr. and Mrs. Bailey hope to send their son to college in eleven years. How much money should they invest now at an interest rate of 9% per year, compounded continuously, in order to be able to contribute $7500 to his education?
Do not round any intermediate computations, and round your answer to the nearest cent.

Answer 1

Mr. and Mrs. Bailey need to invest $2906.50 so as to send their son to college.

Compound interest

Compound interest is given by:

$A=P(1+\frac{r}{n})^{nt}$

where A is the amount after t years, P is initial amount, r is the rate and n is the times compounded per period

Given that n = 1, r = 9% = 0.09, A = $7500 t = 11. Hence:

$7500=P(1+\frac{0.09}{1} )^{1*11}\\\\P=\ 2906.50$

Mr. and Mrs. Bailey need to invest $2906.50 so as to send their son to college.

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