Joe deposits $3500 into a bank account that earns interest compounded continuously. If Joe's money
1 answer:
Answer: 8%.
Step-by-step explanation:
To find this answer, use the compounding interest rate formula, or an exponential function:
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:
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.
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Answer:
His parents should invest $15,278.16 to reach this goal ⇒ 4th answer
Step-by-step explanation:
* Lets explain how to solve the problem
- Derrick will need $39,500 in 10 years for college tuition
∴ The future amount is $39,500
∴ The time for investment is 10 years
- P is the money his parents invest now at 9.5% annual interest,
compounded daily
∴ The rate is 9.5% per year compounded daily
- The formula of the compounded interest is:
, where
# A is the future value of money
# P is the value of investment
# r is the rate of interest in decimal
# t is the time of investment
# n is the period of the time
∵ A = $39,500
∵ t = 10
∵ r = 9.5/100 = 0.095
∵ n = 365 ⇒ compounded daily
- Lets use the formula above to find P
∴
∴
- Divide both sides by 2.58539
∴ P = $15278.16
∴ His parents should invest $15,278.16 to reach this goal