Question

How much should be invested now at an interest rate of 6.5% per year, compounded continuously l, to have $3500 in four years.Round your answer to the nearest cent.

Answer 1

Okay, here we have this:

Considering the provided information we are going to replace in the formula of continuous compound interest:

$\begin{gathered} A=Pe^{rt} \\ 3500=Pe^{(0.065\cdot4)} \end{gathered}$

Now, let's solve for P:

$\begin{gathered} P=\frac{3500}{e^{0.26}} \\ P= 2,698.68 \end{gathered}$

Finally we obtain that should be invested $2,698.68.