Question

Lillian is going to invest in an account paying an interest rate of 5.7% compounded continuously. How much would Lillian need to invest, to the nearest ten dollars, for the value of the account to reach $7,600 in 7 years?

Answer 1

$5,155.7

Explanation:

Using the compound interest formula;

Amount = 7600

Time = 7years

Rate = 5.7% = 0.057

Required

Principal

Substitute

A = P(1+r)^n

7600 = P(1+0.057)^7

7600 = P(1.057)^7

7600 = 1.4741P

P = 7600/1.4741

P = 5,155.69

Hence Lilian would need to invest $5,155.7 (to nearest ten dollars)