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Popular Word Problems >

Farid deposited 100.00 into a new savings account that earns interest compounded continuously. After 1 year, the balance in the account was 113.00. What was the interest rate on the account?

Solution

F a r i d d e p os i t e d 100.00 in t o a n e w s a v in g s a cco u n t t ha t e a r n s in t eres t co m p o u n d e d co n t in u o u s l y . A f t er 1 ye a r, t h e ba l an ce in t h e a cco u n t w a s 113.00. Wha t w a s t h e in t eres t r a t e o n t h e a cco u n t ?

Solution

Rate : 12.22176 \dots %

Solution steps

Translate the problem into an equation:

113 = 100 e^{r \cdot 1}

Solve for

r, 113 = 100 e^{r \cdot 1} : r = 12.22176 \dots %

Rate : 12.22176 \dots %

Popular Examples

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