Question

You need $12,000 in your account 5 years from now and the interest rate is 6% per year, compounded continuously.
How much should you deposit now?

Can someone explain the steps of solving this to me, please?

Answer 1

instantaneous compounding implies:

amount = deposit x e^(rt) , where r is the rate expressed as a decimal

so
amount = 12000(e^(.06)(5))
= 12000 e^.3
= ...

you have a function key on your calculator which does e^x , it is usually the 2nd function key of ln x