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Math Help - Business Caluculus

  1. #1
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    Business Caluculus

    A promissory not will pay $50,000 at maturity 5 years from now. The note has an interest rate of 6.4% compounded continuously...

    1. What is the note worth right now?
    2. You bought the note and cashed it after 5 years. How much interest did you earn?

    I set up the equation as 50,000=Ce^.064*0 but how do I solve that and then I have no idea how do do the second part of the question...PLEASE HELP!
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  2. #2
    Grand Panjandrum
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    Quote Originally Posted by ryandman89 View Post
    A promissory not will pay $50,000 at maturity 5 years from now. The note has an interest rate of 6.4% compounded continuously...

    1. What is the note worth right now?
    2. You bought the note and cashed it after 5 years. How much interest did you earn?

    I set up the equation as 50,000=Ce^.064*0 but how do I solve that and then I have no idea how do do the second part of the question...PLEASE HELP!
    The equation you require is that:

    V(t)=Ce^{0.064 t},

    where t is in years. So in this case:

    C = 50000/e^{0.064*5}.

    The interest paid is 50000 - C.

    RonL
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