CD paying 2.75% interest continuously for 5 years gives you a payment of $194.60 at end of the 5 years. What is the original principal?
+23254 The appropriate formula is: A = Pert
where: A = final amount P = beginning amount r = rate (as a decimal) t = time e = 2.71828...
For this problem: interest = 2.75% ---> r = 0.0275'
time = 5 years ---> t = 5
payment = $194.60 ---> A = 194.60
original principal is unknown
A = Pert ---> 194.60 = Pe0.0275 x 5 ---> 194.60 = Pe0.1375 ---> 194.60 / e0.1375 = P
---> P = 169.60
