Question

Tristan is going to invest $73,000 and leave it in an account for 18 years. Assuming

the interest is compounded continuously, what interest rate, to the nearest tenth of a
percent, would be required in order for Tristan to end up with $104,000?

Answer 1

2%

Explanation:

Given,P = $73000

A = $104000

T = 18 years, Compounded annually.

To find: r%

Soln: By formula, A = 73000*(1+r/100)^18

=> (104/73)^1/18 = (100+r)/100

=> 1.0198 = 100+r/100

=> 101.98 -100 = r

=> 1.98 = r

To the nearest percent, 2 = r

Hence, Rate of interest = 2%