rita promises to give her 12–year–old daughter $12,000 when she turns 18. how much does she need to put in the bank now if the i
1 answer:
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It would take 10.7 years.
The formula for continuously compounded interest is:
where P is the principal, r is the interest rate as a decimal number, and t is the number of years.
Using our information we have:
We want to know when it will double the principal; therefore we substitute 2P for A and solve for t:
Divide both sides by P:
Take the natural log, ln, of each side to "undo" e:
Divide both sides by 0.065:
The formula for continuously compounded interest is:
where P is the principal, r is the interest rate as a decimal number, and t is the number of years.
Using our information we have:
We want to know when it will double the principal; therefore we substitute 2P for A and solve for t:
Divide both sides by P:
Take the natural log, ln, of each side to "undo" e:
Divide both sides by 0.065: