SOLUTION: This is the example to the problem A promissory note will pay 60.000 at maturity 20 years from now. If you pay 20,000 for the not now, what rate compounded continuously would you

Algebra ->  Exponential-and-logarithmic-functions -> SOLUTION: This is the example to the problem A promissory note will pay 60.000 at maturity 20 years from now. If you pay 20,000 for the not now, what rate compounded continuously would you      Log On


   

Question 334685: This is the example to the problem
A promissory note will pay 60.000 at maturity 20 years from now. If you pay 20,000 for the not now, what rate compounded continuously would you earn?
I can work most of the problem however I have problem coming up with the answer 0.05493
Answer by solver91311(24713) About Me  (Show Source):
You can put this solution on YOUR website!


The formula for the Future Value, of an investment at rate of interest for years compounded continuously is:



Substitute what you know:



A little algebra:



Take the natural log of both sides:



Apply the laws of logarithms:



But , so:



The rest is just calculator work.

John

My calculator said it, I believe it, that settles it