SOLUTION: An amount of money was invested in an account which earned interest at a rate compounded continuously. After 11 years, the investment doubled. Determine the interest rate used at t
Algebra ->
Customizable Word Problem Solvers
-> Finance
-> SOLUTION: An amount of money was invested in an account which earned interest at a rate compounded continuously. After 11 years, the investment doubled. Determine the interest rate used at t
Log On
Question 539448: An amount of money was invested in an account which earned interest at a rate compounded continuously. After 11 years, the investment doubled. Determine the interest rate used at the time of investment. Answer by stanbon(75887) (Show Source):
You can put this solution on YOUR website! An amount of money was invested in an account which earned interest at a rate compounded continuously. After 11 years, the investment doubled. Determine the interest rate used at the time of investment.
------
Formula: A(t) = Ao*e^(rt)
Ao is the amount invested.
A(t) is the value after t years.
---
When A(t) = 2*Ao the investment has doubled.
--------
Solve: e^(rt) = 2 for "r" when t = 11.
e^(11r) = 2
-------
Take the natural log:
11r = ln(2)
r = 0.0630
rate = 6.3%
==============
Cheers,
Stan H.
==============
(