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Jason is going to invest $720 and leave it in an account for 6 years. Assuming the interest is compounded continuously, what interest rate, to the nearest hundredth of a percent, would be required in order for Jason to end up with $930

User Theanine
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2 Answers

7 votes

Answer:4.27%

Explanation:

User Cephus
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1 vote

Answer: A = Pe^(rt)

Where A is the amount of money at the end of the investment period, P is the principal amount, e is the mathematical constant e (approximately equal to 2.71828), r is the interest rate, and t is the time period.

In this case, we know that:

P = $720 (the initial investment)

A = $930 (the desired end amount)

t = 6 years (the investment period)

We can solve for r by rearranging the formula:

r = ln(A/P) / t

Where ln is the natural logarithm.

Plugging in the numbers, we get:

r = ln($930/$720) / 6

r = 0.0436 or 4.36%

Therefore, Jason would need an interest rate of approximately 4.36% (to the nearest hundredth of a percent) in order to end up with $930 after 6 years of continuous compound interest.

User Godfrzero
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