Addison is going to invest in an account paying an interest rate of 6% compounded continuously. How much would Addison need to invest, to the nearest ten dollars, for the value of the account to reach 94,000 in 5 years?

Solution

Addison is going to invest in an account paying an interest rate of 6% compounded continuously. How much would Addison need to invest, to the nearest ten dollars, for the value of the account to reach 94, 000 in 5 years?

Solution

Principal : 69636.91

Solution steps

Translate the problem into an equation:

94000 = P e^{0.06 \cdot 5}

Solve for

P, 94000 = P e^{0.06 \cdot 5} : P = 69636.91

Principal : 69636.91

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