London is going to invest in an account paying an interest rate of 5.7% compounded continuously. How much would London need to invest, to the nearest ten dollars, for the value of the account to reach 281,000 in 19 years?

Solution

L o n d o n 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 5.7% 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 o n d o n 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 281, 000 in 19 ye a rs ?

Principal : 95140.49

Solution steps

Translate the problem into an equation:

281000 = P e^{0.057 \cdot 19}

Solve for

P, 281000 = P e^{0.057 \cdot 19} : P = 95140.49

Principal : 95140.49