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Find the missing values assuming continuously compounded interest.

Initial Investment
Annual % Rate
Time to Double
Amount After 10 Years
$750
A) Calculate the initial investment.
B) Determine the annual % rate.
C) Find the time to double the investment.
D) Calculate the amount after 10 years.

User SkonJeet
by
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1 Answer

2 votes

Final answer:

To find the missing values assuming continuously compounded interest, we can use the formula for compound interest. We can calculate the initial investment, determine the annual % rate, find the time to double the investment, and calculate the amount after a given time period.

The correct option is not given.

Step-by-step explanation:

To find the missing values assuming continuously compounded interest, we can use the formula for compound interest:

Future Value = Principal x (1 + interest rate)^time

A) To calculate the initial investment, we can rearrange the formula as:

Principal = Future Value / (1 + interest rate)^time

For example, if the amount after 10 years is $750, we can substitute the values into the formula:

Principal = $750 / (1 + interest rate)^10

B) To determine the annual % rate, we need to use logarithms to solve for the interest rate:

interest rate = (Future Value / Principal)^(1/time) - 1

Using the values from part A, we can substitute them into the formula to calculate the annual % rate.

C) To find the time to double the investment, we need to rearrange the formula as:

time = log(Base, (Future Value / Principal))

Using the given values, we can calculate the time it takes to double the investment.

D) To calculate the amount after 10 years, we can use the formula:

Amount = Principal x (1 + interest rate)^time

Substituting the values into the formula, we can calculate the amount after 10 years.

The correct option is not given.

User Hemflit
by
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