Question 698316: a deposit of 1500$ is made in a savings account for which the interest is compounded continously. the balance will double after 17 years, what is the annual percentage rate for this account?
Answer by lwsshak3(11628)   (Show Source):
You can put this solution on YOUR website! a deposit of 1500$ is made in a savings account for which the interest is compounded continously. the balance will double after 17 years, what is the annual percentage rate for this account?
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Formula for continuous compounding:
A=Pe^rt, P=initial investment, r=annual rate of interest, A=amt after t years
For given problem:
A/P=2
e^rt=2
e^17r=2
take log of both sides
17rlne=ln2
lne=1
17r=ln2
r=ln2/17
r≈.0408
annual percentage rate≈4.08%
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