Question

11./Southwest Dry Cleaners believes that it will need new equipment in 11 years. The equipment will cost $175,000. What lump sum should be invested today at 4.21% compounded continuously, to obtain an amount of $175,000? The lump sum is: (A) between $109,800 and $109,900 (B) between $109,900 and $110,000 (C) between $110,000 and $110,100 (D) between $110,100 and $110,200 (E) between $110,200 and $110,300

Answer 1

113 til years 8=4.21% Value at 11 years is 175,000 compounded continuously, find Original sum should be invested, => formula of continous compundeld is P= Po por where; P= value at time t, s-sate of intest ta time of intrest applied, Po= Original sum. 0.0421X11 175,000 Poe 0.463) : 175,000 - Po e Po $110) 32.697 between $110,100 € $ 110,200 option [o