Choose the one alternative that best completes the statement or answers the question.
-Cindy will require $12,000 in 5 years to return to college to get an MBA degree. How much money should she ask her parents for now so that, if she invests it at 11% compounded continuously, she will have enough for
School? (Round your answer to the nearest dollar.)
A) $3,994
B) $7,121
C) $6,923
D) $20,799

Question

Quizplus · Accepted Answer

To find the present value needed, use the formula for continuous compounding: $ P = \frac{F}{e^{rt}} $, where $ F = 12000 $, $ r = 0.11 $, and $ t = 5 $. Calculating gives approximately $6,923.

Choose the One Alternative That Best Completes the Statement or Answers