Problem

Suppose that $P$ dollars in principal is invested in an account earning $3.5 \%$ interest compounded continuously. At the end of $4 \mathrm{yr}$, the amount in the account has earned $\$ 976.78$ in interest. Part: $0 / 2$ Part 1 of 2 (a) Find the original principal, Round to the nearest dollar. (Hint: Use the model $A=P e^{r t}$ and substitute $P+97678$ for $A$.) The original principal was approximately $\$ \square$.

Solution

Step 1 :Given that the final amount in the account is the original principal plus the interest earned, which is \(P + 976.78\). The interest rate is \(3.5\% = 0.035\) and the time is \(4\) years.

Step 2 :Substitute these values into the formula for continuous compound interest, \(A = P e^{rt}\), and solve for \(P\).

Step 3 :Solving the equation gives \(P\) approximately equal to 6500.00204578594.

Step 4 :Rounding to the nearest dollar gives the original principal as approximately \(\boxed{6500}\) dollars.

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Source: https://solvelyapp.com/problems/ooZSovno5S/

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