Question

Amanda invests a sum of money in a retirement account with a fixed annual interest rate of 9 % compounded ontinuously . After 19 years , the balance reaches $38,956.06. What was the amount of the initial investment ?

Answer 1

$7045.82

Explanation:

The formula for the balance of an account earning interest at rate r compounded continuously for t years is ...

A = Pe^(rt)

We want to find P, given the other parameters in this formula.

__

38956.06 = P(e^(0.09×19)) = P(5.52896148)

P = 38956.06/5.52896148 ≈ 7045.82

The amount of the initial investment was about $7045.82.