How do you solve this:
what principal invested at 10% compounded continuously for 4 years will yield $1090?
what principal invested at 10% compounded continuously for 4 years will yield $1090?
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A = P x e^(rt)
1090 = P x e^(0.1 x 4)
1090 = P x e^(0.4)
P = 1090 / e^(0.4) = 730.65
1090 = P x e^(0.1 x 4)
1090 = P x e^(0.4)
P = 1090 / e^(0.4) = 730.65
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In the case of continuous compounding, the amount due (A) , Principal (P) , Rate of interest (R) and time (T) are related as the following to each other ---
=> A = P e^( RT/ 100 )
Where e = 2.718282 (Approx)
In your question A = $1090 , R = 10, T = 4 yrs and P = ?
Putting all the values in the above formula we get ----
=> $1090 = P [ e^( 0.1 * 4 ) ]
=> P = 1090 divided by [ e^( 0.1 * 4 ) ] = $ 734.25 ..................... Answer Answer
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.
=> A = P e^( RT/ 100 )
Where e = 2.718282 (Approx)
In your question A = $1090 , R = 10, T = 4 yrs and P = ?
Putting all the values in the above formula we get ----
=> $1090 = P [ e^( 0.1 * 4 ) ]
=> P = 1090 divided by [ e^( 0.1 * 4 ) ] = $ 734.25 ..................... Answer Answer
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
.