Question

Jocelyn is going to invest in an account paying an interest rate of 2.3% compounded

continuously. How much would Jocelyn need to invest, to the nearest hundred
dollars, for the value of the account to reach $550 in 15 years?

Answer 1

9514 1404 393

Answer:

$400

Explanation:

The formula for the value of an account with interest rate r compounded continuously for t years is ...

A = Pe^(rt)

We want to find P when A = 550, r = .023, and t = 15.

550 = Pe^(0.023·15) ≈ 1.41199P

P = 550/1.41199 = 389.52 ≈ 400

Jocelyn would need to invest about $400 to reach $550 in 15 years.