What question do you ask when checking your answer and presenting the solution?
1 answer:
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<u>Answer: </u>
$800 will become $ 1300 in 6.94 years when compounded continuously at the annual interest rate of 7%.
<u>Solution: </u>
Given that
Amount deposited = $800,
Rate if interest = 7% = 0.07
Required amount = $1300
And most important thing that interest is compounded continuously.
Formula of Amount where interest is compounded continuously is as follows
Where A is final amount,
P is principal Amount,
r = rate of interest
t = duration in years
In our case A = $1300, P = $800, r = 0.07. We need to evaluate “t” that is number of year.
On substituting given values in formula of amount we get
Taking ln both the sides
= 1 .So we get,
ln(1.625) = 0.07t
= 6.9358 ≈ 6.94 years
Hence $800 will become $ 1300 in 6.94 years when compounded continuously at the annual interest rate of 7%.