Results 1 to 3 of 3

Math Help - Interest rate

  1. #1
    Junior Member
    Joined
    Nov 2009
    Posts
    41

    Interest rate

    An initial investment of $4000 doubles in value in 6.8 years. Assuming continuous compounding, what was the interest rate?
    Follow Math Help Forum on Facebook and Google+

  2. #2
    Master Of Puppets
    pickslides's Avatar
    Joined
    Sep 2008
    From
    Melbourne
    Posts
    5,236
    Thanks
    28
    I would use the model

    A=Pe^{rt}

    where A = annuities, P = principal amount invested, r = rate, t = time in years

    Therefore

    A=4000e^{rt}

    as the amount doubled over 6.8 years, using (t,A) = (6.8,8000) gives

    8000=4000e^{6.8\times r}

    Can you solve for r?

    Spoiler:
    r = \frac{\ln(2)}{6.8}\approx 10\%
    Follow Math Help Forum on Facebook and Google+

  3. #3
    Junior Member
    Joined
    Nov 2009
    Posts
    41
    Quote Originally Posted by pickslides View Post
    I would use the model

    A=Pe^{rt}

    where A = annuities, P = principal amount invested, r = rate, t = time in years

    Therefore

    A=4000e^{rt}

    as the amount doubled over 6.8 years, using (t,A) = (6.8,8000) gives

    8000=4000e^{6.8\times r}

    Can you solve for r?

    Spoiler:
    r = \frac{\ln(2)}{6.8}\approx 10\%
    10.19% just what i was looking for
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Calculate interest rate based on interest in parcels
    Posted in the Business Math Forum
    Replies: 1
    Last Post: February 17th 2011, 09:38 PM
  2. Interest rate
    Posted in the Business Math Forum
    Replies: 5
    Last Post: December 26th 2010, 03:16 PM
  3. Interest Rate
    Posted in the Advanced Statistics Forum
    Replies: 1
    Last Post: January 26th 2010, 06:37 PM
  4. interest rate
    Posted in the Business Math Forum
    Replies: 2
    Last Post: March 24th 2009, 07:29 PM
  5. interest rate
    Posted in the Business Math Forum
    Replies: 2
    Last Post: June 9th 2007, 06:37 AM

Search Tags


/mathhelpforum @mathhelpforum