Question
Asked Nov 8, 2019
A bank note will be worth $75,500 when it matures in 5 years. If the note pays 4.96% per year compounded continuously, determine how much an
individual must pay now for the note. (Round your answer to the nearest cent.)
$
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A bank note will be worth $75,500 when it matures in 5 years. If the note pays 4.96% per year compounded continuously, determine how much an individual must pay now for the note. (Round your answer to the nearest cent.) $

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check_circleExpert Solution
Step 1

Recall the following fact.

Compound Amount = Pe"
where P is the Principal amount
ris the interest rate
t is the number of years
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Compound Amount = Pe" where P is the Principal amount ris the interest rate t is the number of years

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Step 2

Substitute the given values and compute ...

P = $75,000, P=?, t =5 andr = 4.96%
=Pe"
Compound Amount, P
0.0496x5
75000 Pe
P75000e 0.04965
= 75000e248
=$58,527
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P = $75,000, P=?, t =5 andr = 4.96% =Pe" Compound Amount, P 0.0496x5 75000 Pe P75000e 0.04965 = 75000e248 =$58,527

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