SOLUTION: At what rate do you need to invest money into a bank account earning continuously compounded interest if you want to double your money in 30
months?
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months?
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Question 1206580: At what rate do you need to invest money into a bank account earning continuously compounded interest if you want to double your money in 30
months? Answer by ikleyn(52765) (Show Source):
You can put this solution on YOUR website! .
At what rate do you need to invest money into a bank account earning continuously
compounded interest if you want to double your money in 30 months?
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A continuously compouned interest formula is
A(t) = ,
where A(0) is starting amount (principal deposit); A(t) is the current amount;
t is the time in years; "r" is the exponential rate coefficient, which is
under the problem's question.
30 months is 2.5 years, so we want
2A(0) = .
It implies
2 = .
Take the natural logarithm of both sides
ln(2) = 2.5*r
and find the rate r
r = = 0.2773 (rounded).
ANSWER. The compounded interest rate should be about 0.2773, or 27.73%.
