Question

Savannah is going to invest $220 and leave it in an account for 12 years. Assuming

the interest is compounded continuously, what interest rate, to the nearest tenth of a
percent, would be required in order for Savannah to end up
with $430

Answer 1

5.7%

Explanation:

The formla for calculating compound interest is expressed as;

A = P(1+r)^t

A is the amount = $430

P is the principal = $220

r is the rate

t is the time = 12 years

Substitute and get r;

430 = 220(1+r)^12

430/220 = (1+r)^12

1.955 = (1+r)^12

1.057 = 1+r

r = 1-1.057

r = 0.057

r = 5.7%

The interest rate is 5.7%