Homework Help: ALGEBRA 1

Posted by amber on Sunday, February 27, 2011 at 7:10am.

Cindy will require $15,000 in 2 years to return to college to get an MBA degree. How much money should she ask her parents for now so that, if she invests it at 12% compounded continuously, she will have enough for school?

ALGEBRA 1 - MathMate, Sunday, February 27, 2011 at 9:35am
The continuous interest formula is
A=Pe^rt
A=future amount, 15000
P=principal (unknown)
e=euler's constant, 2.71828..
r=rate of interest, 0.12 for 12%
t=time in years (for annual rate of interest), 2 years

So
15000=P*e^0.12*2
P=15000/(e^0.24)

Can you take it from here?

Do a check by the reverse calculation, to see if
P*e^0.24 gives 15000.

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