Savings account paying nominal annual interest

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Reference no: EM131240628

Bart wishes to tour the country with his friends. To do this, he is saving money for a bus.

(a) How much money must Bart deposit in a savings account paying 8% nominal annual interest, compounded continuously, in order to have $8,000 in 4.5 years?

(b) A friend offers to repay Bart $8,000 in 4.5 years if Bart gives him $5,000 now. Assuming continuous compounding, what is the nominal annual interest rate of this offer?

Reference no: EM131240628

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