(If you're looking for the future value of $225 invested annually for 10 years at 6.5% continuously compounded interest, you can find the formula here:
http://www.financeformulas.net/Future-Va...
It's a little easier to understand the way they've written out the formula - can't duplicate it here.
2) FV = P(e^rt)
45,000 = P(e^0.08 * 10)
45,000 = P(e^0.80)
45,000 = P(2.22554)
45,000 / 2.22554 = P
P = $20,219.80
#2 - set up the formula, re-arrange it algebraically, and solve.
Answer 1 and/or 2!
1) Find the amount of a continuous money flow in which $225 per year is being invested at 6.5%, compounded continuously for 10 years.
2) At the time of the birth of a child, a parent wants to begin a college fund that will grow to $45000 by the child's 18th birthday. Interest is compounded continuously at 8%. What should the initial investment (P0) be?
