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Math Help - Compound Interest question

  1. #1
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    Compound Interest question

    I am having trouble figuring this problem out; it's confusing me. I appreciate the help

    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!
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  2. #2
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    Quote Originally Posted by Harryhit4 View Post
    I am having trouble figuring this problem out; it's confusing me. I appreciate the help

    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
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  3. #3
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    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.
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  4. #4
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    e^(i*pi)'s Avatar
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    Quote Originally Posted by Harryhit4 View Post
    I am having trouble figuring this problem out; it's confusing me. I appreciate the help

    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 View Post
    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) View Post
    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
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  5. #5
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    Quote Originally Posted by e^(i*pi) View Post
    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
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