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Popular Word Problems >

Zack opened a savings account 4 years ago. The account earns 14% interest, compounded continuously. If the current balance is 800.00, how much did he deposit initially?

Solution

Z a c k o p e n e d a s a v in g s a cco u n t 4 ye a rs a g o . T h e a cco u n t e a r n s 14% in t eres t, co m p o u n d e d co n t in u o u s l y . I f t h e c u rre n t ba l an ce i s 800.00, h o w m u c h d i d h e d e p os i t ini t ia ll y ?

Solution

Principal : 456.97

Solution steps

Translate the problem into an equation:

800 = P e^{0.14 \cdot 4}

Solve for

P, 800 = P e^{0.14 \cdot 4} : P = 456.97

Principal : 456.97

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