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Following the birth of a​ child, a parent wants to make an initial investment Upper P 0 that will grow to ​$70 comma 000 for the​ child's education at age 17. Interest is compounded continuously at 6​%. What should the initial investment​ be? Such an amount is called the present value of ​$70 comma 000 due 17 years from now.

Respuesta :

Answer: The initial investment would be Rs. 25243.41.

Step-by-step explanation:

Since we have given that

Amount = $70000

Rate of interest = 6%

Time period = 17 years

So, we need to find the initial investment.

Using "compound interest continuously", we get that :

[tex]FV=PVe^{i\times t}\\\\70000=PVe^{0.06\times 17}\\\\70000=PVe^{1.02}\\\\70000=PV\times 2.773\\\dfrac{70000}{2.773}=PV\\\\25243.41=PV[/tex]

Hence, the initial investment would be Rs. 25243.41.

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