If you want your retirement account to have a balance of $200000 when you retire in 35 years, how much should you invest now at a rate of 8% interest compounded continuously?

Question

tkhunny · Answer

Solve for A.  $$A\cdot e^{0.08t} = 200000$$  Is it looking familiar?

anonymous · Answer

yes
I have the equation set up as Pe^(.08*35)=200000
but im not quite sure how to solve it

tkhunny · Answer

What's to solve?  Evaluate the numbers.  Hvwe youan exponent function on your calculator?  You'll need one.  I suppose you could rewrite a little, first:  $$P = 200000\cdot e^{-0.08\cdot 35}$$

anonymous · Answer

ooooooo ok thank you,,, so you just multiply the exponential function over, wouldnt you need to divide it though to get in on the other side?

tkhunny · Answer

I did divide, but the fraction was cumbersome so I rewrite it with the negative exponent.  You need to get natural and fluent at this.

anonymous · Answer

ooooo bc the exponent is negative, makes it division?

tkhunny · Answer

$$\frac{1}{B} = B^{-1}$$  Were you paying attention in algebra class?  :-)

anonymous · Answer

i took algebra class like 10 years ago but thx

tkhunny · Answer

Fair enough.  That is a valid excuse.  You will need it, though.  Get it up to speed and good work!