Use the continuous compound interest formula to find the indicated value. A=​$17,673​; P=​$12,200​; t=60 ​months; r=​?

Question

Use the continuous compound interest formula to find the indicated value.

A=​$17,673​; P=​$12,200​; t=60 ​months; r=​?

r=_______​%

​(Round to three decimal places as​ needed.)

Answer 1

the underlying formula that you want to use on this one is

A = Pe^(rt)

solving for r and plugging in the values that we know then yields

r = ln(A/P) / t

r = ln(17673/12200) / 5

r = 0.3706 / 5 = 0.07412

which in percentage terms here would be 7.412%

Answer 2

A = Pe^rt; from here r = ln(A/P)/t = ln(17673/12200)/60 = .00618 = 0.618%