Question

Joe deposits $3500 into a bank account that earns interest compounded continuously. If Joe's money

Answer 1

Answer: 8%.

Step-by-step explanation:

To find this answer, use the compounding interest rate formula, or an exponential function:

$A = P(r)^t$

Where A is the amount of money after t years, using P (principal) dollars as the investment and r as the rate.

We are trying to solve for r, so substitute the correct values for the other three variables:

$7000 = 3500(r)^9\\\\2 = r^9$

Solving for r, we find that r to the ninth power equals 2.

Simplifying this, r is equal to 2^(1/9), or 1.08~. The interest rate was 8 percent.