# Help

• Dec 22nd 2006, 06:59 PM
aaasssaaa
Help
1) if an old stamp is currently worth $60. The stamp's value will grow exponential by 15% each year. When will the stamp be wroth three times its intial value? 2) Mark invests$500 in a savings plan that pays interest, which is compounded monthly. At the end of 10 years, his intial investment is worth $909.70. What interest rate did the plan pay? • Dec 23rd 2006, 03:28 AM CaptainBlack Quote: Originally Posted by aaasssaaa 1) if an old stamp is currently worth$60. The stamp's value will grow exponential by 15% each year. When will the stamp be wroth three times its intial value?

If $p$ is the principle and $r$ the intrest rate (in %) the value after $n$ years is:

$
V=p\,(1+r/100)^n
$

Now for your problem you want $V=3p$ and $r=15$ and solve for n:

$p\,(1.15)^n=3\,p$,

so:

$n\ \ln(1.15)=\ln(3)$,

so:

$n=\frac{\ln(3)}{\ln(1.15)}\approx 7.86 \mbox{ years}$

RonL
• Dec 23rd 2006, 03:34 AM
CaptainBlack
Quote:

Originally Posted by aaasssaaa
2) Mark invests $500 in a savings plan that pays interest, which is compounded monthly. At the end of 10 years, his intial investment is worth$909.70. What interest rate did the plan pay?

If $r$ is the % rate per period then you have:

$500\ (1+r/100)^{120}=909.70$

which you need to solve for $r$ which is the interest rate per
month.

This is because 10 years is 120 periods.

RonL