Meena is going to invest in an account paying an interest rate of 3% compounded continuously. How much would Meena need to invest, to the nearest hundred dollars, for the value of the account to reach 470 in 13 years?

Solution

M ee na 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% 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 M ee na n ee d t o in v es t, t o t h e n e a res t h u n d re d 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 470 in 13 ye a rs ?

Principal : 318.22

Solution steps

Translate the problem into an equation:

470 = P e^{0.03 \cdot 13}

Solve for

P, 470 = P e^{0.03 \cdot 13} : P = 318.22

Principal : 318.22