In 3 years, Farid wants to buy a bicycle that costs 800.00. If he opens a savings account that earns 10% interest compounded continuously, how much will he have to deposit as principal to have enough money in 3 years to buy the bike?

Soluzione

I n 3 ye a rs, F a r i d w an t s t o b u y a bi cyc l e t ha t cos t s 800.00. I f h e o p e n s a s a v in g s a cco u n t t ha t e a r n s 10% in t eres t co m p o u n d e d co n t in u o u s l y, h o w m u c h w i ll h e ha v e t o d e p os i t a s p r in c i p a l t o ha v e e n o ug h m o n ey in 3 ye a rs t o b u y t h e bik e ?

Principal : 592.65

Fasi della soluzione

Translate the problem into an equation:

800 = P e^{0.1 \cdot 3}

Risolvi per

P, 800 = P e^{0.1 \cdot 3} : P = 592.65

Principal : 592.65