Question

Eva is going to invest in an account paying an interest rate of 6.1% compounded continuously. How much would Eva need to invest, to the nearest ten dollars, for the value of the account to reach $71,000 in 7 years?

The answer is 46320

Answer 1

$46,320

Explanation:

Given that

The rate of interest is 6.1%

The amount is $71,000

And, the time period is 7 years

We need to find out the invested amount

As we know that

In the compounded continously, the following formula should be used

Amount = Invested amount × e^(rate × time period)

$71,000 = Invested amount × e^(6.1% × 7)

$71,000 = Invested amount × e^0.427

$71,000 = Invested amount × 1.5326

So, the investment amount is

= $71,000 ÷ 1.5326

= $46324,912

= $46,320