<h3>Answer: 2.93</h3>
Note: The percent sign is already taken care of.
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Explanation:
The continuously compounded interest formula is
where,
- A = 1431 = account balance t years into the future
- P = 1200 = deposit
- e = special constant roughly equal to 2.718
- r = unknown interest rate and what we want to find
- t = 6 years
Since the unknown variable r is in the exponent, we'll need logs to solve it. A handy phrase is "if the exponent is in the trees, log it down to find it". By "log it down" I mean in terms of lumber, and not a journal.
We could use any base logarithm, but it's handy to use the special base 'e' log. This is the natural logarithm abbreviated as Ln.
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Solving for r involves these steps
Move the decimal over 2 spots to the right to convert 0.0293 to 2.93%
This is the same as multiplying by 100.