Question

Dash puts $4125 into an account using compounded continuously. If he keeps the

money in the account for 5 years and now has a total of $4193.89. What is the

interest rate?

Answer 1

0.33%

Explanation:

The account value when principal P is compounded continuously at annual rate r for t years is given by ...

A = Pe^(rt)

For the given values, we can solve for r:

4193.89 = 4125e^(r·5)

We can divide by 4125, take the natural log, then divide by the coefficient of r to find the value of r:

ln(4193.89/4125)/5 = r ≈ 0.33%

The interest rate is about 0.33%.