Question

Manny has an investment account that compounds interest continuously at a rate of 3.1%. After 2 years, he has $7500 in the account. How much money did he initially place in the account? Round your answer to the nearest dollar.

Answer 1

Explanation:

Use the formula for calculating compound interest A=Pert where P is the unknown, A=7500, r=0.031, and t=2.

Because P is the unknown value, solve the initial formula for P by dividing both sides by ert.

A=Pert

Aert=P

Substitute the values into the formula and simplify.

7500e(0.031)(2)=P

7500e0.062=P

7049.1216...=P

Rounded to the nearest whole dollar, P≈7049.

Answer 2

7500=P•E(0.031)(2)
75=PE^0.062
P=7500/E^0.062
P=7500/1.063962345
P=7049.121649
P=7049
Thus the answer is $7049