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Popular Word Problems >

Lester deposited 8,815.00 into a new savings account that earns interest compounded continuously. After 10 years, the balance in the account was 32,646.00. What was the interest rate on the account?

Solution

L es t er d e p os i t e d 8, 815.00 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 10 ye a rs, t h e ba l an ce in t h e a cco u n t w a s 32, 646.00. 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 : 13.09267 \dots %

Solution steps

Translate the problem into an equation:

32646 = 8815 e^{r \cdot 10}

Solve for

r, 32646 = 8815 e^{r \cdot 10} : r = 13.09267 \dots %

Rate : 13.09267 \dots %

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