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Grayson is going to invest in an account paying an interest rate of 4% compounded continuously. How much would Grayson need to invest, to the nearest dollar, for the value of the account to reach 15,000 in 5 years?

Solution

Grayson is going to invest in an account paying an interest rate of 4% compounded continuously. How much would Grayson need to invest, to the nearest dollar, for the value of the account to reach 15, 000 in 5 years?

Solution

Principal : 12280.96

Solution steps

Translate the problem into an equation:

15000 = P e^{0.04 \cdot 5}

Solve for

P, 15000 = P e^{0.04 \cdot 5} : P = 12280.96

Principal : 12280.96

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