mathematics for management

8.find the amount to be invested now at 6% compounded monthly so as to accumulate $8888 in three years.

solution :
p=8888
i=6%
t= 3/360=0.0008

$8888(e^0.06(0.25))
=9022.32

the answer is $ 7427.21

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asked by fizz
  1. NO
    you used the concept of continuous compounding
    but it said it was compounded monthly
    Even with the above in consideration your expression of
    8888(e^0.06(0.25))
    makes absolutely no sense.

    i = .06/12 = .005
    n = 3(12) = 36 months

    PV = 8888(1.005)^-36
    = $7427.21

    For a single investment, there is one main formula:

    Amount = PV (1+i)^n <------> PV = Amount (1+i)^-n
    where i is the periodic rare, and n is the number of interest periods

    for annuity you have

    Amount = payment ( (1+i)^n - 1)/i
    Present value = payment ( 1 - (1+i)^-n)/i

    The vast majority of compound interest problems are handled with these 3 formulas.
    Memorize them.

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    posted by Reiny
  2. III DDIDNT WRITE THIS SOMEONES MESSING WITTHH ME,THE WREON G GIRL I DONT NWANT TO SPELL PROPELLY,INNN AAA RRUUUSSSHHH CCCRRRIIISSIIISS.

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    posted by fizz

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