Find the interest rate needed

timer Asked: Dec 1st, 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

Athul K
School: UC Berkeley


A = Pe^rt

5000 = 4000 e^(4t)

apply ln on both sides

ln 1.25 = 4t ln e

 t= ln 1.25 / 4

 t = .0558

t%= 5.58%

ANSWER IS option A

5.58 %/yr

hope you understood..please message if you have any doubts...thank you

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Good stuff. Would use again.

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