Asked by Jesse
How would you set this problem up..I know to use A=Pe^rt
Larry has $2600 to invest and needs $3000 in 12 years. What annual rate of return wll he need to get in order to accomplish his goal, if interest is compounded continuously?
Larry has $2600 to invest and needs $3000 in 12 years. What annual rate of return wll he need to get in order to accomplish his goal, if interest is compounded continuously?
Answers
Answered by
Damon
P = Po e^rt
3000 = 2600 e^12r
1.154 = e^12r
ln 1.154 = 12 r
.1431 = 12 r
r = .012
= 1.2 %
3000 = 2600 e^12r
1.154 = e^12r
ln 1.154 = 12 r
.1431 = 12 r
r = .012
= 1.2 %
Answered by
Damon
I assumed you knew the recipe for continuous compounding. You can get it as follows:
change in P = dP = P * r * change in T = r dt
dP/P = r dt
ln P = r t
integrate
P = c e^rt
when t = 0, P = Po
P = Po e^rt
change in P = dP = P * r * change in T = r dt
dP/P = r dt
ln P = r t
integrate
P = c e^rt
when t = 0, P = Po
P = Po e^rt
There are no AI answers yet. The ability to request AI answers is coming soon!
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.