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

  • Thread starter Thread starter KatieLynn
  • Start date Start date
  • Tags Tags
    Check my work Work
Click For Summary
SUMMARY

Cindy needs to determine how much to request from her parents to invest for her MBA, requiring $10,000 in 3 years at a 12% continuous compounding rate. The calculation using the formula P=Ae^(-rt) yields a present value of $6,977. Carla's building, valued at $250,000, is projected to appreciate at 25% annually for 4 years. The future value calculation using A=Pe^(rt) results in $679,570, leading to a profit of $429,570 if she waits to sell.

PREREQUISITES
  • Understanding of continuous compounding interest
  • Familiarity with the mathematical constant e
  • Knowledge of exponential growth formulas
  • Basic financial investment principles
NEXT STEPS
  • Study continuous compounding interest calculations
  • Learn about the mathematical constant e and its applications
  • Explore exponential growth in real estate investments
  • Research financial planning for education funding
USEFUL FOR

Students, financial analysts, real estate investors, and anyone involved in financial planning or investment strategies.

KatieLynn
Messages
64
Reaction score
0
intrest rates/investment problem (pert), I just need someone to check my work:)

Homework Statement



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?


Homework Equations



P=Ae^(-rt)

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?
 
Physics news on Phys.org
KatieLynn said:
1)so the equation would be

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

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

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

is all that correct?
Other than r = 25% not 12%, yes.
 
ah yeah I did the math right, I just typed in the wrong rate for the second one
 

Similar threads

Mathematica This Week's Finds in Mathematical Physics (Week 226)
  • · Replies 7 ·
Replies
7
Views
4K
Mathematica This Week's Finds in Mathematical Physics (Week 226)
  • · Replies 7 ·
Replies
7
Views
4K