college math
posted by aj .
A business associate who owes you 3600 dollars offers to pay you 3360 now, or else pay you three yearly installments of 1200 each, with the first installment paid now. Assume that the interest rate will be 7 percent (compounded continuously). Find the total of 3 installments?

so you would start with how much of the money is going to be charged interest. You are being offered a total of 3 installments, but one is being paid now. That means there won't be interest on that installment. Therefore, you have 2 installments that will have compounded interest over a total of 2 years.
Next you use the continuous interest formula, which is S = Pe^rt, where e=2.71 (constant). S is the final value. P is the initial investment, which would be 2400 (1200 times 2 for the 2 years) in your case. r is the percentage rate. And t is the time in years.
Once you find the answer to the formula, you add the cost of the third installment, which was 1200. And you will have the answer. hope that helps!
Respond to this Question
Similar Questions

calculus
Assume your business associate owes you $13650. Also assume they offer either $12020 now or $ 1950 per year for 7 years, starting now. Assume a 5.6% market interest rate, compounded continuously. How much would you have at the end … 
Finance
shley is planning to attend college when she graduates from high school 7 years from now. She anticipates that she will need $10,000 at the beginning of each college year to pay for tuition and fees, and have some spending money. Ashley … 
math
A man borrows $50,000 towards the cost of a house. Compound interest is charge on the loan at 125 per annum. He agrees to pay back the loan in 25 equal installments, at yearly intervals, the first repayment being made exactly 1 year … 
finance
Anne is planning to attend college when she graduates from high school in 7 years from now. She anticipates that she will need $10,000 at the beginning of each college year to pay for tuition and fees, and have some spending money. … 
calculus
The proprietor of Carson Hardware Store has decided to set up a sinking fund for the purpose of purchasing a computer 2 yr from now. It is expected that the purchase will involve a sum of 40000 dollars. The fund grows at the rate of … 
Word problem
Jessica just bought a refrigerator for 570 . She paid 199.50 in a down payment and will pay the rest in 5 equal installments. How much does she need to pay for each installment? 
math
mr. greatest bought an aotomobile for $250,000and paid a 20% down payment .it the rate of interest is 6.5% per year, and he agrees to pay the balance in 20 equal monthly installments,what is the amount of each installment? 
math
Jon Ericson bought a home with a 11.5% adjustable rate mortgage for 20 years. He paid $10.67 monthly per thousand on his original loan. At the end of 2 years he owes the bank $50,000. Now that interest rates have gone up to 13%, the … 
Mathematics
Yumi's grandparents presented her with a gift of $12,000 when she was 10 yr old to be used for her college education. Over the next 7 yr, until she turned 17, Yumi's parents had invested her money in a taxfree account that had yielded … 
Mathematics
Yumi's grandparents presented her with a gift of $12,000 when she was 10 yr old to be used for her college education. Over the next 7 yr, until she turned 17, Yumi's parents had invested her money in a taxfree account that had yielded …