SOLUTION: find the interest rate needed for $6500 to grow to $10400 in 3 years if interest is continously compounded.

Algebra.Com
Question 612930: find the interest rate needed for $6500 to grow to $10400 in 3 years if interest is continously compounded.
Answer by jim_thompson5910(35256)   (Show Source): You can put this solution on YOUR website!
Start with the continuous compounding formula.


Plug in , , and .


Divide both sides by .


Evaluate to get .


Take the natural log of both sides.


Pull down the exponent using the identity .


Evaluate the natural log of 'e' to get 1.


Multiply and simplify.


Evaluate the natural log of to get (this value is approximate).


Divide both sides by to isolate 'r'.


Evaluate to get .


Flip the equation.


Round to the nearest ten-thousandth.


So the interest rate is roughly 15.67%

RELATED QUESTIONS

Chris Lynch plans to invest $200 into a money market account. Find the interest rate that (answered by robertb)
chris lynch plans to invest $200 into a money market account. Find the interest rate that (answered by Boreal)
What rate of interest compounded continuously is needed for an investment of $500 to... (answered by lwsshak3)
What rate of interest compounded continuously is needed for an investment of $500 to grow (answered by lwsshak3)
What rate of interest compounded continuously is needed for an investment of $3000 to... (answered by Alan3354)
$1000 is invested at 5% compounded monthly. to how much money will that grow in 10... (answered by rfer)
ind the interest rate needed for an investment of $5,000 to grow to an amount of $5,500... (answered by lwsshak3)
Find the required annual interest rate to the nearest tenth of a percent for $1400 to... (answered by stanbon)
What rate of interest, to the nearest tenth of a percent, compounded quarterly is needed... (answered by stanbon)