Question

How much should be invested now at an interest rate of 6% per year, compounded continuously, to have $2500 in five years?

Answer 1

$1,923.08.

Explanation:

First, converting R percent to r a decimal

r = R/100 = 6%/100 = 0.06 per year.

Solving our equation:

P = 2500 / ( 1 + (0.06 × 5)) = 1923.0769230769

P = $1,923.08

The principal investment required to get a total amount, principal plus interest, of $2,500.00 from simple interest at a rate of 6% per year for 5 years is $1,923.08.