Question

Jackson is going to invest $33,000 and leave it in an account for 20 years. Assuming the interest is compounded continuously, what interest rate, to the nearest tenth of a percent, would be required in order for Jackson to end up with $133,000?

Answer 1

Rate = 7.0% per year

Explanation:

Formula: rate = In(A/P)/t

I = interest

n = compound, in this case continuous

A = Total amount ($133,000)

P = Principal ($33,000)

t = time (20 years)

Plug in the values and solve:

rate = In(133000/33000)/20

rate = 0.06969

Convert to percentage:

rate = 6.969%

Round to the nearest tenth of a percent:

rate = 7.0%