SOLUTION: A promissory note will pay $48,000.00 at maturity 9 years from now. If you pay $27,000.00 for the note now, what rate compounded continuously would you earn?

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Question 1154740: A promissory note will pay $48,000.00 at maturity 9 years from now. If you pay $27,000.00 for the note now, what rate compounded continuously would you earn?
Answer by ikleyn(52915) About Me  (Show Source):
You can put this solution on YOUR website!
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48000 = 27000%2A%281%2Br%29%5E9


48000%2F27000 = %281%2Br%29%5E9


1.777778 = %281%2Br%29%5E9


Take log base 10 of both sides


log(1.77778) = 9%2Alog%28%281%2Br%29%29


log(1+r) = log%28%281.77778%29%29%2F9 = 0.027764

1 + r = 10%5E0.027764 = 1.066

r = 1.066 - 1 = 0.066 = 6.6%.      ANSWER

Solved.