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Stumped x
06-05-2006, 01:56 AM
Hello,

I am having trouble calculating the compound continous amount of a problem and Present Value.

For example,

Jessica plans to borrow \$15,000 from a bank that charges 12% compounded continiously. If she pays back the money in 4 years, how much will she have paid. A = PeRT (raised)
15000e x 0.48 (raised) however I can not get the proper answer on my calculator however the teacher does say the formula is correct

I'm not sure what I am doing wrong? Or why I can not come up with the correct answer? (\$24,241.12)

Another of the problems on my last quiz was
Find the present value of \$12,000 at 5% compounded continously for 3 years.

My teacher gave us this formula P= A
-----
e RT (raised)
Now I can get the formula the teacher wants out of the problem

P = 12,000
______
e .15 (raised)

I'm not sure what I am doing wrong? Or why I can not come up with the correct answer? (\$10,328.50)

Any help would be greatly appreciated.

Thank you

guntram
06-05-2006, 02:54 AM
Hello, Stumped x

Do not multiply. You must use power function, e.g.
1) 15,000xe^0.48=24,241.12
2)12,000/e^0.15=10,328.50

Denis
06-05-2006, 12:24 PM
"Jessica plans to borrow \$15,000 from a bank that charges 12% compounded each second..."

24,225.30 if compounded each second (31,536,000 seconds per year) :shock: