Question

A savings account starts with $312.50. After 9 years of continuous compounding at an interest rate, r, the account has $1250.

What is the interest rate percentage?

Round the answer to the nearest hundredth.

someone said it was 10.98% but i submitted that and it said it was wrong so i do not know

Answer 1

Okay, let's walk through this step-by-step:

The initial balance of the savings account: $312.50

The final balance after 9 years: $1250

Let's call the interest rate r.

We know the final balance is the initial balance times (1 + r)^9

(because of continuous compounding over 9 years)

So:

312.50 = (1 + r)^9

312.50 / (1 + r)^9 = 1250

Solving for r:

(312.50 / 1250)^(1/9) = 1 + r

0.2504 = 1 + r

0.7596 = r

Converting to a percentage:

0.7596 * 100% = 75.96%

Rounding to the nearest whole percent: 76%

So the interest rate is 76%.

Does this make sense? Let me know if you have any other questions!