Please help me with the following problem. I'm not able to get the right answer! Please provide a full solution that I can follow... thank you.
How much money should be invested now at 7% to obtain $9,000 in 5 years if interest is compounded:
a) Quarterly
b) Continuously
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My work:
a)
B = 9000(1 + (0.07/4)^20
B = 12 733
b)
B(5) = 9000e^0.07
B(5) = 0652.57
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Textbook answer:
a) $6 361.42
b) $6 342.19
How much money should be invested now at 7% to obtain $9,000 in 5 years if interest is compounded:
a) Quarterly
b) Continuously
------------
My work:
a)
B = 9000(1 + (0.07/4)^20
B = 12 733
b)
B(5) = 9000e^0.07
B(5) = 0652.57
------------
Textbook answer:
a) $6 361.42
b) $6 342.19