Question

Ms. Cubbatz invested a sum of money in a certificate of deposit that earns 8% interest compounded continuously. The formula for calculating interest that is compounded continuously is A = Pe". If Ms. Cubbatz made the investment on January 1, 1995, and the account was worth $12,000 on January 1, 1999, what was the original amount in the account?

Answer 1

Answer:

original amount in the account: 8820.36   (≈ 8820)

Step-by-step explanation:

12000 = P (1 + 0.08)⁴

P = 12000 / (1 + 0.08)⁴ = 12000 / 1.36 = 8820.36   (≈ 8820)