00:01
So in this problem, we're told that mr.
00:01
And mrs.
00:02
Davis are hoping to send their son to college in 12 years from now.
00:05
They want to know how much money should they invest right now at an interest rate of 8 .5 % that's going to be compounded continuously in order to have $9 ,500.
00:15
Well, in this particular case, we're going to use our compound interest formula for when it's compounded continuously.
00:20
So the formula goes like this.
00:22
It's a of t, the amount after a given number of years, is equal to a sub zero, the initial amount invested, times e, are constant.
00:30
Raised to the rt power, where r is the rate and t is the time.
00:34
So let's substitute in what we know.
00:36
Well, we know the amount we want to have after 12 years is 9500.
00:40
So that would be our a of t value.
00:42
A sub -zero is the initial amount, which we don't know.
00:45
So i'm just going to call that a, so we don't have that sub -zero...