Precalculus (10th Edition)

Published by Pearson
ISBN 10: 0-32197-907-9
ISBN 13: 978-0-32197-907-0

Chapter 5 - Exponential and Logarithmic Functions - 5.7 Financial Models - 5.7 Assess Your Understanding - Page 321: 22

Answer

$\$654.98.$

Work Step by Step

According to the Formula for compounding continuously, where $P$ is the principal, the amount deposited, $r$ is the annual interest rate, $t$ is the number of years, $A$ is the amount you get back after $t$ years: $A=P\cdot e^{r\cdot t}.$ Here we have: $t=2.5\text{ years}$ $r=8\%=0.08$ $A=\$800$ Substitute these values into the formula above to obtain: $\$800=P\cdot e^{0.08\cdot 2.25}$, hence $P=\frac{800}{ e^{0.08\cdot 2.25}}=\$654.98.$
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.