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Lamonte is going to invest in an account paying an interest rate of 4% compounded continuously. How much would Lamonte need to invest, to the nearest cent, for the value of the account to reach 12,300 in 8 years?

Solution

Lamonte is going to invest in an account paying an interest rate of 4% compounded continuously. How much would Lamonte need to invest, to the nearest cent, for the value of the account to reach 12, 300 in 8 years?

Solution

Principal : 8931.63

Solution steps

Translate the problem into an equation:

12300 = P e^{0.04 \cdot 8}

Solve for

P, 12300 = P e^{0.04 \cdot 8} : P = 8931.63

Principal : 8931.63

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