Question

An initial investment of $200 is now valued at $350. The annual interest rate is 8% compounded continuously. The equation represents the situation, where t is the number of years the money has been invested. About how long has the money been invested? Use a calculator and round your answer to the nearest whole number.

Answer 1

Answer: B) 7 years

An initial investment of $200 is now valued at $350. The annual interest rate is 8% compounded continuously. The equation represents the situation, where t is the number of years the money has been invested. About how long has the money been invested? Use a calculator and round your answer to the nearest whole number.

Answer 2

Using the formula for continuous compounding, F=Pe^rn, we will be able to determine the number of years it took P= 200 to become F= 350. We just substitute the given numbers into the equation, let F=350, P=200, and r=0.08. We will obtain n=7 years, which is the number of years for 200 to become 350.