Math help needed to Find the interest rate #11

timer Asked: Nov 8th, 2015
account_balance_wallet $5

Question Description

Find the interest rate needed for an investment of $4,000 to grow to an amount of $5,000 in 4 yr if interest is compounded continuously. Please round the answer to the nearest hundredth of percent.

Tutor Answer

School: UCLA

Thank you for the opportunity to help you with your question!

let the annual interest rate is d then compound continuously, we have 

4000*exp(d*4) =  5000

exp (4d) = 1.25

4d = ln 1.25 = 0.05578

A is correct

Please let me know if you need any clarification. I'm always happy to answer your questions.

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