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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