Question

An account earned 5.4% interest compounded continuously. After 12 years the balance was

$1,433,785.18. What was the principal amount?
$762,775.54
O $748,999
$750,000

Answer 1

To find the principal amount, you can use the formula for continuously compounded interest:

A = Pe^(rt)

where A is the final account balance, P is the initial principal (or starting) amount, r is the interest rate, and t is the time (in years) for which the interest is being calculated.

Substituting in the given values:

1,433,785.18 = P * e^(0.054 * 12)

To find P, we can divide both sides by e^(0.054 * 12)

P = 1,433,785.18 / e^(0.054 * 12)