Mike and Terri estimate that they want to buy a house for 15

Mike and Terri estimate that they want to buy a house for $158,000.00$158,000.00, and they need to make a down payment of 12.5%12.5% of the cost of their house. If they have 3636 months to save for the down payment, how much do they need to invest into an account earning 3.382%3.382% compounded continuously so that they can reach their goal?

Solution

12.5% of 158000 = 19750

therefore down payment of $ 19750 is to be made

time = 36 months = 3 years

interest = 3.382 % = .0382

A = P e^rt

19750 = P e^(.0382*3)

P = 19750 / e^(.0382*3)

P = 6336.60

he need to invest $ 6336.60 to reach the goal