Suppose that the annual interest rate on your checking account is 8 percent compounded continuously. In order to have $ 12000 in 3 years, how much should you deposit now? Assume, that the current balance is $ 0.
The formula for continuously compounded interest is A = Pe^rt, where A is the amount of money after time t, P is the principal (initial amount of money), r is the interest rate, and t is the time.
In this case, A = 12000, P = 0, r = 0.08, and t = 3.
Therefore, 0 = 0e^(0.08*3)
Solving for P, we get P = 0.
Therefore, you do not need to deposit any money now in order to have $12000 in 3 years.