College Algebra (10th Edition)

Published by Pearson
ISBN 10: 0321979478
ISBN 13: 978-0-32197-947-6

Chapter 6 - Section 6.7 - Financial Models - 6.7 Assess Your Understanding - Page 475: 15


${{\$}} 88.72$

Work Step by Step

Apply the Present Value Formulas Theorem The present value $P$ of $A$ dollars to be received after $t$ years, assuming a per annum interest rate $r$ compounded $n$ times per year, is $P=A\displaystyle \cdot\left(1+\frac{r}{n}\right)^{-nt}$ If the interest is compounded continuously, then $P=Ae^{-rt}$ --- Compounding: n=12 times per year, $A=100, t=2, r=0.06.$ $P=100\displaystyle \cdot\left(1+\frac{0.06}{12}\right)^{-24}\approx{{\$}} 88.72$
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