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| Formula for contineous compounding future value= P*e^rt | |||||
| * we have to find the value of e using table of calculator or excel I am using excel . | |||||
| a | b | c | d | ||
| P= | 1625 | 1625 | 1625 | 1625 | |
| r=interest rate | 14% | 6% | 8% | 9% | |
| t=year | 5 | 5 | 5 | 5 | |
| r*t= | 0.70 | 0.30 | 0.40 | 0.45 | |
| e^rt | 2.013753 | 1.349859 | 1.491825 | 1.568312 | |
| Excel formula | =exp(0.7) | =exp(0.3) | =exp(0.4) | =exp(0.45) | |
| P*e^rt | 3272.35 | 2193.52 | 2424.22 | 2548.51 | |
| Therefore Future value = | 3272.35 | 2193.52 | 2424.22 | 2548.51 | |
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If a nominal interest rate of 8% is compounded continuously, determine the unknown quantity in each of the following situations: a. What uniform EOY amount for 9 years is equivalent to $7,000 at EOY 9? b. What is the present equivalent value of $900 per year for 12 years? c. What is the future equivalent at the end of the fifth year of $237 payments made every six months during the five years? The first...
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