Question

Ken has an investment account which compounds interest continuously at a rate of 3.4%. After 4 years, he has $4400 in the account. How much money did he initially place in the account? Round your answer to the nearest dollar. Do NOT round until you have calculated the final answer.

Answer 1

$6617

Explanation:

Use the formula for calculating compound interest A=P0ert where A is the unknown, P0=4400, r=0.034, and t=12. Substitute the values into the formula and simplify.

A=4400e0.034⋅12

A=4400e0.408

A=4400(1.503...)

A=6616.75

After 12 years, there will be A≈6617 in the account, rounded to the nearest dollar.

Answer 2

$3841

Solve the formula for calculating compound interest

a=Pe rt for