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How much money must you deposit now to have$6,000 in ten years at 6.5% compounded continuously?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14EB: How much must be invested now to receive $50,000 for 8 years if the first $50,000 is received in one...

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Question

How much money must you deposit now to have
$6,000 in ten years at 6.5% compounded continuously?

Expert Solution

Step 1

To calculate the money to be deposit now calculate the present value.

Present Value = Future Value / e^rt

Step 2

Present Value = Future Value / e^rt

Present Value = $ 6,000 / e^0.065*10

Present Value = $ 6,000 / e^0.65

Present Value = $ 6,000 / 1.915541

Present Value = $ 3,132.275

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