Question

How much should you invest in an account that pays 6% annual interest compounded continuously if you want exactly $8000 after four years?

Answer 1

$6239

Explanation:

A(t) = P•e^rt

Substitute with 6% 0.06, t with 4 and A(t) with 8,000 to find the value of P.

8, 000 = P•e^0.06•4

8, 000 = P•e^0.24

8, 000 = P•1.27

P = 6, 293