What interest rate is needed for an investment of 450 to be worth 1440 after 27 years if interest is compounded continuously? Enter your answer in decimal form and round to the nearest thousandth.

Solution

Wha t in t eres t r a t e i s n ee d e d f or an in v es t m e n t o f 450​​​​ t o b e w or t h ​​1440​​ a f t er 27​​​ ye a rs i f in t eres t i s co m p o u n d e d co n t in u o u s l y ? E n t er yo u r an s w er in d ec ima l f or m an d ro u n d t o t h e n e a res t t h o u s an d t h .

Rate : 4.30796 \dots %

Solution steps

Translate the problem into an equation:

1440 = 450 e^{r \cdot 27}

Solve for

r, 1440 = 450 e^{r \cdot 27} : r = 4.30796 \dots %

Rate : 4.30796 \dots %