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Popular Word Problems >

How much would you have to deposit in an account with a 7.5% interest rate, compounded continuously, to have 2500 dollars in your account 8 years later.

Solution

Ho w m u c h w o u l d yo u ha v e t o d e p os i t in an a cco u n t w i t h a 7.5% in t eres t r a t e, co m p o u n d e d co n t in u o u s l y, t o ha v e 2500 d o ll a rs in yo u r a cco u n t 8 ye a rs l a t er .

Solution

Principal : 1372.03

Solution steps

Translate the problem into an equation:

2500 = P e^{0.075 \cdot 8}

Solve for

P, 2500 = P e^{0.075 \cdot 8} : P = 1372.03

Principal : 1372.03

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