Mr. and Mrs. Green hope to send their daughter to college in fourteen years. How much money should they invest now at an interest rate of 9.5% per year, compounded continuously, in order to be able to contribute \$9500 to her education?

Solution

M r . an d M rs . G ree n h o p e t o se n d t h e i r d a ug h t er t o co ll e g e in f o u r t ee n ye a rs . Ho w m u c h m o n ey s h o u l d t h ey in v es t n o w a t an in t eres t r a t e o f 9.5% p er ye a r, co m p o u n d e d co n t in u o u s l y, in or d er t o b e ab l e t o co n t r ib u t e $9500 t o h er e d u c a t i o n ?

Amount : 35919.91

Solution steps

Translate the problem into an equation:

A = 9500 e^{0.095 \cdot 14}

9500 e^{0.095 \cdot 14} = 35919.91218 \dots

Round to the nearest hundredth:

35919.91

Amount : 35919.91