COmpound interest

Question

Find the interest rate needed for an investment of $9,000 to grow to $12,000 in 9 years if interest is compounded continuously. (Round your answer to the nearest hundredth of a percentage point.)

Answer 1

for this, you would use the formula r= (V_n/V_p)^(1/n) - 1, where V_n is the future value, V_p is the present (starting) value, n is the number of periods (years) and r is the rate for which you are solving.

So, plug your variables into the formula:

r= (Vn/Vp)^(1/n) - 1

r= (12,000/9,000)^(1/9) - 1

r= (1.333333333)^(.11111111) - 1
r=1.032481032 - 1
So r should be equal to .032481032. Multiply by 100 to turn it into a percent, and it becomes 3.2481032, or 3.25%