SOLUTION: Suppose that $50,000 from a retirement account is invested in a stock fund. After 20 years, the value is $194,809.67 a.) use A=Pert to determine the average rate of return. (round

Question 1102812: Suppose that $50,000 from a retirement account is invested in a stock fund. After 20 years, the value is $194,809.67
a.) use A=Pert to determine the average rate of return. (round to the nearest tenth of a percent)
b.) how long will it take the investment to reach $300,000? (Round to the nearest tenth of a year) use r from part a)
Answer by jorel1380(3719) (Show Source): You can put this solution on YOUR website!
a)If the interest is continuously compounded, then:
194809.67=50000.00e^20r
where r is the annual interest rate. So:
3.8961934=e^20r
ln 3.8961934=ln e^20r=20r ln e=20r
r=0.068=6.8% average rate of return
b)300000=50000e^.068t
6=e^0.068t
ln 6=ln e^0.068t=0.06t ln e=0.068t
t=26.35 years before the investment is worth $300,000
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