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5 January, 10:23

What principal invested at 8% compounded continuously for 4 years will yield $1190?

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  1. 5 January, 11:02
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    For continuously compounded interest:

    Amount = Principle * e^ (rate * time)

    A rate of 8% converted to a decimal value: r=0.08

    With time t=4

    and amount 1190

    Plug all these values in,

    1190 = Principle * e^ (0.08 * 4)

    And use your calculator to solve for the principle.

    Maybe we'll call it P to make things easier.

    1190 = P * e^ (0.08 * 4)

    1190 = P * 1.377

    The principle is being multiplied by this 1.377,

    divide by 1.377 to undo the multiplication.

    864.11735 = P
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