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3 years ago

What principal invested at 8% compounded continuously for 4 years will yield $1190?

1 answer:

7 0

For continuously compounded interest:

Amount = Principle * e^(rate * time)

A rate of 8% converted to a decimal value: r=0.08
With time t=4
and amount 1190

Plug all these values in,

1190 = Principle * e^(0.08 * 4)

And use your calculator to solve for the principle.
Maybe we'll call it P to make things easier.

1190 = P * e^(0.08 * 4)
1190 = P * 1.377

The principle is being multiplied by this 1.377,
divide by 1.377 to undo the multiplication.

864.11735 = P

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