SOLUTION: Complete the table assuming continuously compounded interest. (Round your answers to two decimal places.) Initial Investment: $958.54 Annual Rate (%): UNKNOWN Time to Double:

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Question 1119019: Complete the table assuming continuously compounded interest. (Round your answers to two decimal places.)
Initial Investment: $958.54
Annual Rate (%): UNKNOWN
Time to Double: 11 yr
Amount After 10 Years: $1800
Found 2 solutions by ankor@dixie-net.com, greenestamps:
Answer by ankor@dixie-net.com(22740) About Me  (Show Source):
You can put this solution on YOUR website!
Complete the table assuming continuously compounded interest.
(Round your answers to two decimal places.)
Initial Investment: $958.54
Annual Rate (%): UNKNOWN
Time to Double: 11 yr
Amount After 10 Years: $1800
:
The continuous interest formula: A+=+P%2Ae%5E%28rt%29,
find the rate for any amt to double in 11 yrs
e%5E%2811r%29+=+2
11r+=+ln%282%29
r = .693%2F11
r = .063 or 6.3% interest
:
Amt after 10 yrs = 1800 at 6.3%, find P
p%2Ae%5E%28.063%2A10%29+=+1800
p%2Ae%5E.63+=+1800
Using a calc find e^.63
1.8776p = 1800
p = 1800%2F1.8776
p = $958.67, close to the original amt



Answer by greenestamps(13203) About Me  (Show Source):
You can put this solution on YOUR website!


The given numbers for the initial investment and the amount after 10 years are irrelevant. The interest rate is exactly determined knowing that the doubling time is 11 years.

e%5E%2811r%29+=+2
11r+=+ln%282%29
r+=+ln%282%29%2F11+=+0.063 to 3 decimal places.

The given initial amount and the amount after 10 years are consistent with that interest rate; but neither of those numbers is needed to determine the interest rate, which is what the question asked for.