Question

If you can invest money at a rate of 8.5% compounded continuously, and you want to have 34,000 at the
end of 15 years, how much do you need to invest initially?

Answer 1

Answer:

Step-by-step explanation:

The formula to compound continuously is

$A(t)=Pe^{(r)(t)}$ where

A(t) is the amount after all the compounding is done,

P is the initial investment,

r is the interest rate in decimal form, and

t is the time in years.  

For us, that looks like this:

$34000=Pe^{(15)(.085)}$ and

$34000=Pe^{1.275}$

When you raise e (Euler's number) on your calculator to that power you get

34000 = P(3.57870141) and

P = 9500.65