Compound Interest?

If you need $20,000 in your bank account in 6 years, how much must be deposited now? The interest rate is 10%, compounded continuously.

Use formula: P = Po(e)^rt

The Po is actually a P with a little zero.

20,000 = Po(e)^(0.10)(6)

Now how to solve this...? :)

Probably simple algebra -- I don%26#039;t know why I%26#039;m stuck!

Compound Interest?business loan

20,000 = Po e^.6

Po = 20,000/e^.6 = $10,976.23

Compound Interest?

loan

hi, solving is one thing.. think you made a little mistake

with the equation though.. here goes:

P=P0(1+r)^t

with r=0.1

P=P0(1.1)^t

P=P0(e^rt)

(1.1)^t=e^rt

ln(1.1)^t)=ln(e^rt)

t ln(1.1)=rt

r=ln(1.1)=0.09531

so P:

P=P0e^0.09531t

check: 1 yr: with P0= 1000 should be 1100

P=1000*e^0.09531 = 1000*1.1 ok

20000 = P0e^0.09531t

ln(20000)=ln(P0e^0.09531t)

ln(20000)=ln(P0)+ln(e^09531t)

ln(P0)=ln(20000)-0.09531*t

t=6

ln(P0)=9.3316

P0=11289.490

check:

P=11298.490*e^0.09531*6

P=11298.490*1.77155 =20K

well $15 more, rounding problem

bit late, filling in the t=6, forgot:) but just for future stuff:)

ln(a*b) = ln(a)+ln(b)

so ln(Po*e^x) = ln(P0)+ln(e^x)=ln(P0)+x