Peoples Bank offers 8% compounded continuously on CDs What amount invested now grow to 100,000 in 25 years Hint the continuous compounding formula

Given:

Rate of interest = 8% compounded continuously.

Amount = 100,000

Time = 25 years

To find:

The principal value.

Solution:

Formula for amount after continuous compound interest:

Where, A is amount, P is principal, r is the rate of interest and t is the number of years.

Putting in the above formula, we get

On further simplification, we get

Therefore, the amount 13533.528 is invested.

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