Question: In the compound inter- est formula A = P(1 + r/n) nt , we can think of P as the present value of an investment

In the compound inter- est formula A = P(1 + r/n)^nt, we can think of P as the present value of an investment and A as the future value of an investment after t years. For example, if you were saving for college and needed a future value of A dollars, then P would represent the amount needed in an account today to reach your goal in t years at an interest rate of r, compounded in times per year. If we solve the equation for P, it results inA parent expects college costs to reach $40,000 in 6 years. To cover the $40,000 in future expenses, how much should the parent deposit in an account that pays 6% interest compounded continuously?

P = A(1 + r/n)-.

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