Question

Please assist with the answer

Answer 1

Answer: $1203.83

Explanation: Continuous compounding is a great thing if you are earning on an investment. It says that the principal is constantly earning interest and the interest on interest is also compounding continuously. The formula for the continuous compounding is:

`A = P*e^(r*t)`

where, A = $2600

e = the mathematical constant e (2.7128)

r = 11%

n = 7 years

By inputting the above variables in the formula,

`$2600 = P * e^(0.11*7)`

`$2600 = P * e^(0.77)`

$2600 = P * 2.159766

P = $1203.834

Therefore, the amount to be invested today will be $1203.834