Alexandra opened a savings account 10 years ago. The account earns 14% interest, compounded continuously. If the current balance is 8,000.00, how much did she deposit initially?

Solution

Alexandra opened a savings account 10 years ago. The account earns 14% interest, compounded continuously. If the current balance is 8, 000.00, how much did she deposit initially?

Solution

Principal : 1972.78

Solution steps

Translate the problem into an equation:

8000 = P e^{0.14 \cdot 10}

Solve for

P, 8000 = P e^{0.14 \cdot 10} : P = 1972.78

Principal : 1972.78

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