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Popular Word Problems >

mr smith invested 200000 into a fund that compounded interest continuously. Ten years later his account had a balance of 220000. what interest rate did his investment earn

Solution

m r s mi t h in v es t e d 200000 in t o a f u n d t ha t co m p o u n d e d in t eres t co n t in u o u s l y . T e n ye a rs l a t er hi s a cco u n t ha d a ba l an ce o f 220000. w ha t in t eres t r a t e d i d hi s in v es t m e n t e a r n

Solution

Rate : 0.95765 \dots %

Solution steps

Translate the problem into an equation:

220000 = 200000 (1 + \frac{r}{1})^{1 \cdot 10}

Solve for

r, 220000 = 200000 (1 + \frac{r}{1})^{1 \cdot 10} : r = 0.95765 \dots %

Rate : 0.95765 \dots %

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