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Popular Word Problems >

How much should be invested now at an interest rate of 5% per year, compounded continuously, to have \$2000 in three years?

Solution

Ho w m u c h s h o u l d b e in v es t e d n o w a t an in t eres t r a t e o f 5% p er ye a r, co m p o u n d e d co n t in u o u s l y, t o ha v e $2000 in t h ree ye a rs ?

Solution

Principal : 1721.42

Solution steps

Translate the problem into an equation:

2000 = P e^{0.05 \cdot 3}

Solve for

P, 2000 = P e^{0.05 \cdot 3} : P = 1721.42

Principal : 1721.42

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