Jeriel is going to invest in an account paying an interest rate of 6.5% compounded continuously. How much would Jeriel need to invest, to the nearest cent, for the value of the account to reach 137,000 in 5 years?

Solution

J er i e l 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 6.5% 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 J er i e l n ee d t o in v es t, t o t h e n e a res t ce n t, 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 137, 000 in 5 ye a rs ?

Principal : 98986.25

Solution steps

Translate the problem into an equation:

137000 = P e^{0.065 \cdot 5}

Solve for

P, 137000 = P e^{0.065 \cdot 5} : P = 98986.25

Principal : 98986.25