Levi is going to invest in an account paying an interest rate of 3.4% compounded continuously. How much would Levi need to invest, to the nearest ten dollars, for the value of the account to reach 620 in 16 years?

Solution

L e v i i s g o in g t o in v es t in an a cco u n t p a y in g an in t eres t r a t e o f 3.4% co m p o u n d e d co n t in u o u s l y . Ho w m u c h w o u l d L e v i n ee d t o in v es t, t o t h e n e a res t t e n d o ll a rs, f or t h e v a l u e o f t h e a cco u n t t o re a c h 620 in 16 ye a rs ?

Principal : 359.86

Solution steps

Translate the problem into an equation:

620 = P e^{0.034 \cdot 16}

Solve for

P, 620 = P e^{0.034 \cdot 16} : P = 359.86

Principal : 359.86