Question

Lisa deposited $600.00 into a new savings account that earns interest compounded continuously. After 3 years, the balance in the account was $718.00. What was the interest rate on the account? Round your answer to the nearest tenth of a percent.

Answer 1

Use A = Pe^{rt}. So 718 = 600 e^{3r}, hence

e^{3r} = 718/600 = 1.1966667
3r = ln(1.1966667) ≈ 0.1795404
r ≈ 0.1795404/3 ≈ 0.0598468.

As a percent, r ≈ 5.9847% ≈ 6.0% (to the nearest tenth of a percent).