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Intrest rates/investment problem (pert), I just need someone to check my work

  1. Nov 11, 2007 #1
    intrest rates/investment problem (pert), I just need someone to check my work:)

    1. The problem statement, all variables and given/known data

    1)Cindy requires $10,000 in 3 years to return to college to get and MBA degree. How much money should she ask her parent for now so that, if she invests it at 12% compounded continuously, she will have enough for school?

    2)Carla just inherited a building that is worth $250,000. The building is in a high demand area, and the value of the building is projected to increase at a rate of 25% per year for the next 4 years. How much more money will she make if she waits for four years to sell the building instead of selling it now?


    2. Relevant equations

    P=Ae^(-rt)

    3. The attempt at a solution

    1)so the equation would be

    P= (10,000)e^(-.12*3) which equals $6,977 correct?


    2)A=Pe^(rt)

    A= $250,000e^(.12*4) = $679,570

    so then $679,570-$250,000=$429,570

    is all that correct?
     
  2. jcsd
  3. Nov 11, 2007 #2

    EnumaElish

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    Science Advisor
    Homework Helper

    Yes.
    Other than r = 25% not 12%, yes.
     
  4. Nov 11, 2007 #3
    ah yeah I did the math right, I just typed in the wrong rate for the second one
     
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