Problema Solution
Susie is planning to invest some money in a savings account which pays 7% compounded continuously. Consider the following formula, where A is the ending account balance after t years, P is the initial amount of money invested, and r is the interest rate.
A = P(2.71) rt
About how much money would she have to invest in the savings account in order for it to have a balance of $10,000 after 19 years?
Answer provided by our tutors
we need to find P, the principal
r = 0.07 (the annual rate as a decimal)
t = 19 years the time
A = $10,000 the future value
A = P(2.71)^(rt)
P = (1/((2.71)^(rt))*A
P = (1/((2.71)^(0.07*19))*10000
P = $2,655.53
click here to see the step by step calculation:
Susie should invest $2,655.53 in the saving account.