Question

Sung Lee invests $10,000 at age 18. He hopes the investment will be worth $30,000 when he turns 25. If the interest compounds continuously, approximately what rate of growth will he need to achieve his goal? Round to the nearest tenth of a percent.

Answer 1

r=17%

Explanation:

P is the investment

A is the targeted amount

t= time (25-18=7 years)

A=P(1+r)^t

30000=10000(1+r)^7

(1+r)^7=30000/10000

r=\root(7)(3)-1

r=0.16993 ≅0.17= 17%

check: A=P(1+r)^t ⇒10000(1+0.17)^7=30012≅30000