Question

Lea invests a sum of money in a savings account with an interest rate of 3.4% compounded continuously. After 10 years, the balance is $1900. What is the amount of her initial investment?

Answer 1

$1,352

Explanation:

The computation of the initial amount is shown below:

As we know that

Ending value = Initial investment × e^{rate, time period}

$1,900 = Initial investment × e^{3.4%, 10}

$1,900 = Initial investment × e^0.34

$1,900 = Initial investment × 1.404947591

So, the initial investment is

= $1,900 ÷ 1.404947591

= $1,352