John plans to pay off his loan of 2500 in 8 years If the int

John plans to pay off his loan of $2,500 in 8 years. If the interest on his loan is 4.5% compounded continuously, how much must be his initial deposit to achieve his goal? (Round your answer to two decimal places.)

Solution

Compounded continously : Amount = Intia deposite^(rate*time)

amount = $ 2500; rate = 0.045 ; time = 8 yrs

2500 = Pe^(0.045*8)

P = 2500/1.433 = $ 1744.59 ( intial deposit)