Question 482625: What rate of interest compounded continuously is needed for an investment of $500 to grow to $900 in 10 years?
Answer by lwsshak3(11628)   (Show Source):
You can put this solution on YOUR website! What rate of interest compounded continuously is needed for an investment of $500 to grow to $900 in 10 years?
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Compound interest formula for interest compounded continuously:
A=Pe^rt, r=annual interest rate, P=initial investment, A=amount after t years
..
900=500e^10r
900/500=e^10r
9/5=e^10r
take log(ln) of both sides
ln(9/5)=10r*lne
log of base=1
10r=ln(9/5)=.5878
r=.5878/10=.05878
ans:
Annual rate of interest compounded continuously = 5.878%
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