Find the present value, using the present value formula and a calculator. (Round your answer to the nearest cent.)
Achieve $225,500 at 8.55% compounded continuously for 8 years, 155 days.

Question

Find the present value, using the present value formula and a calculator. (Round your answer to the nearest cent.)
Achieve $225,500 at 8.55% compounded continuously for 8 years, 155 days.

bahrom7893 · Answer

What's the present value formula?

anonymous · Answer

$$m \left[ (1-(1+r/n)^{-nt})\div(r/n ) \right]$$

anonymous · Answer

part im confused on is the compounded continuously

bahrom7893 · Answer

For continuous compounding, use the formula with e:
A = Pe^(rt)

anonymous · Answer

so i would have 225,500=Pe^(.0855* 8.42)? How do i solve for P?

bahrom7893 · Answer

Divide both sides by e^(.0855*8.42)

anonymous · Answer

Thats it?

bahrom7893 · Answer

yup

bahrom7893 · Answer

e is a constant, remember.. e = 2.71...

anonymous · Answer

right

calculusfunctions · Answer

Sorry, my server keeps crashing, but

The present value of a perpetuity under which you receive amount A annually is

A / r

where r is the annual interest rate, compounded continuously.

You can prove the formula with calculus.

anonymous · Answer

A is 225,500?

bahrom7893 · Answer

yes

anonymous · Answer

so just do 225,500/.0855? Thats your answer?

bahrom7893 · Answer

no, do:
225,500/e^(.0855*8.42)

tkhunny · Answer

First, you shoudl get the right formula.  Are you SURE those should be 'n' in the parentheses and in the denominator?

Second, just run an experiment.  Substitute greater and greater values for 'm'.  See if it settles down.