How much money needs to be invested now to obtain 4400 in 2

How much money needs to be invested now to obtain 4400 in 2 years if the interest rate in a savings account is 0.5%, compounded continuously? Round your answer to the nearest cent.

Solution

Amount recieved = 4400

time = 2 years

rate of interest = .5% compounded continuously

applying continuous compounding formula

A = P e^rt

plugging the values

4400 = P e^(.005*2)

4400 = P e^.01

dividing both sides by e^.01

4400/ e^.01 = P

P = $ 4356 ( approx)

amount invested = $ 4356 ( approx)