An investor wants to analyze the earnings of a mutual fund account. 4 years ago the value ofthe account was $22,000

Question

 and it is now worth $27,500 (no additional deposits were made). if the account is compared to a bank account paying interest that is compounded continuously, what interest rate would the bank account have to pay to match the mutual fund accounts earnings?

 

Round the  answer to the nearest hundredth of a percent.

Answer 1

A=Be^rt  for continuous compounding

A=27500, B=22000,  t=4

lnA=lnB+rt

r=(1/t)ln(A/B)=(1/4)ln(275/220)=0.055785888