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Rita opened a savings account 5 years ago. The account earns 8% interest, compounded continuously. If the current balance is $3,000.00, how much did she deposit initially?

Respuesta :

sqdancefan

Answer:

  $2010.96

Step-by-step explanation:

You want the present value of $3000 if it earns 8% interest compounded continuously for 5 years.

Present value

The compound interest formula tells you the future value is ...

  FV = PV(e^(rt))

where PV is the present value, r is the interest rate, and t is the number of years.

Solving for PV, we have ...

  PV = FV·e^(-rt)

  PV = $3000·e^(-0.08·5) = $3000·e^-0.40 ≈ $2010.96

Rita's initial deposit was $2010.96.

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