# Compound Interest question

• Jun 4th 2009, 04:13 PM
Harryhit4
Compound Interest question
I am having trouble figuring this problem out; it's confusing me. I appreciate the help (Happy)

After 18 years of interest compounded continuously, you have $60,000. What is your principle amount? I'm not sure how to do this backwards from the normal way Pe^(rt) Thanks for the help! • Jun 4th 2009, 04:39 PM e^(i*pi) Quote: Originally Posted by Harryhit4 I am having trouble figuring this problem out; it's confusing me. I appreciate the help (Happy) After 18 years of interest compounded continuously, you have$60,000. What is your principle amount?

I'm not sure how to do this backwards from the normal way

Pe^(rt)

Thanks for the help!

$P(t) = P_0e^{rt} = 60000$

$\frac{1}{P_0} = \frac{e^{rt}}{60000}$

$P_0 = \frac{60000}{e^{rt}}$

Without r and t that cannot be solved further
• Jun 4th 2009, 04:58 PM
Harryhit4
Oh, REALLY sorry, I forgot to add the rate! It's 6.25%. Sorry, not thinking straight - my last day of finals is tomorrow with math and spanish.
• Jun 4th 2009, 05:13 PM
e^(i*pi)
Quote:

Originally Posted by Harryhit4
I am having trouble figuring this problem out; it's confusing me. I appreciate the help (Happy)

After 18 years of interest compounded continuously, you have \$60,000. What is your principle amount?

I'm not sure how to do this backwards from the normal way

Pe^(rt)

Thanks for the help!

Quote:

Originally Posted by Harryhit4
Oh, REALLY sorry, I forgot to add the rate! It's 6.25%. Sorry, not thinking straight - my last day of finals is tomorrow with math and spanish.

Quote:

Originally Posted by e^(i*pi)
$P(t) = P_0e^{rt} = 60000$

$\frac{1}{P_0} = \frac{e^{rt}}{60000}$

$P_0 = \frac{60000}{e^{rt}}$

Without r and t that cannot be solved further

Ah right, I overlooked t myself. Assuming 6.25% is per annum:

${P_0} = \frac{60000}{e^{6.25 \times 0.01 \times 18}}$

Put into the calculator and solve
• Jun 5th 2009, 03:37 AM
Harryhit4
Quote:

Originally Posted by e^(i*pi)
Ah right, I overlooked t myself. Assuming 6.25% is per annum:

${P_0} = \frac{60000}{e^{6.25 \times 0.01 \times 18}}$

Put into the calculator and solve

Thank you very much for your help. It came out to 19479.15 :D