SOLUTION: 1. What annual interest rate, to the nearest tenth, will produce $5760 if $3500 is left at interest compounded annually for 10yr? 2. Suppose the inflation rate is 4%. Use the fo

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: 1. What annual interest rate, to the nearest tenth, will produce $5760 if $3500 is left at interest compounded annually for 10yr? 2. Suppose the inflation rate is 4%. Use the fo      Log On

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Question 1039898: 1. What annual interest rate, to the nearest tenth, will produce $5760 if $3500 is left at interest compounded annually for 10yr?
2. Suppose the inflation rate is 4%. Use the formula for continuous compounding to find the number of years, to the nearest tenth, for $1 item to cost $2.
Answer by josmiceli(19441) About Me  (Show Source):
You can put this solution on YOUR website!
Let +r+ = interest rate
+5760+=+3500%2A%28+1+%2B+r+%29%5E10+
+1.6457+=+%28+1+%2B+r+%29%5E10+
Take the 10th root of both sides
+1.05108+=+1+%2B+r+
+r+=+.05108+
The rate is 5.1 %
--------------------------
+2+=+1%2A%28+1+%2B+.04+%29%5Et+
+2+=+1.04%5Et+
Take the log of both sides
+.301+=+t%2A.01703+
+t+=+17.671+
In 17.7 yrs, the item will cost $2