Find the missing values assuming continuously compounded interest. (Round your answers to two decimal places.)

Question

Initial Investment = ?

Annual % Rate = 8.8%

Time to Double = ? yr

Amount After 10 Years = $15,000

Answer 1

2 = e^.088t

ln2 = .088t

t = ln2/.088 = about 7.88 years to double your money

15000 = Ae^.088(10) = Ae^.88

15000/A = e^.88

ln(15000/A) = .88

ln15000 - lnA = .88

lnA = .ln15000-.88 = 8.736

e^lnA = A = e^8.736 = $6,222.95 = initial investment rounded off to nearest cent

6,222.95e^.088(10)=6222.95e^.88 = 6.222.95(2.411) = 15002.9

=slightly more than 15000, so initial investment is slightly less than $6,222.95

in about 8 years, it doubles to about $12,500. In 10 years it reaches $15,000. those next 2 years add another $2,500.